Professional Documents
Culture Documents
Bender Lawsuit, May 2021
Bender Lawsuit, May 2021
EF2021-1389
NYSCEF DOC. NO. 3 RECEIVED NYSCEF: 05/20/2021
- against -
Respondents-Defendants.
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Petitioners-Plaintiffs 61 Crown Street, LLC, 311 Wall Street, LLC, 317 Wall Street, LLC,
323 Wall Street Owners, LLC, 63 North Front Street, LLC, 314 Wall Street, LLC, and 328 Wall
Street, LLC (collectively, “Petitioners”), by and through their attorneys Rodenhausen Chale &
Polidoro LLP, as and for their Verified Petition-Complaint (“Petition”) against Respondents-
Defendants Ulster County Industrial Development Agency, County of Ulster, City of Kingston,
Kingston City School District, JM Development Group, LLC, Herzog Supply Co., Inc., Kingstonian
Development, LLC, Patrick Page Holdings, L.P., Blue Stone Realty, LLC, and Wright Architect,
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PRELIMINARY STATEMENT
1. This hybrid CPLR Article 78 and Declaratory Judgment proceeding concerns the
improper and unpermitted actions of Respondent Ulster County Industrial Development Agency (the
“IDA”) in reviewing, and ultimately deciding to provide financial assistance to, a development
project known as the Kingstonian, a proposed mixed-use facility, including a 420-car garage, 143-
apartment residential complex, 32-room boutique hotel, and 9,000-square foot retail/restaurant
space, pedestrian plaza, and walking bridge located at the intersection of Fair Street and North Front
2. This proceeding has been brought to annul resolutions of the IDA adopted on January
22, 2021, which, among other things: (a) made findings with respect to the Project’s eligibility for
financial assistance, including a determination that the Project constitutes a commercial project; and
(b) approved of financial assistance for the Project in the form of a payment in lieu of taxes
(“PILOT”) agreement which would reduce the Project’s tax liability by over $26 million over 25
3. The PILOT Approvals were only made possible via two prior resolutions which
amended the internal Housing Policy of the IDA to expand the types of housing eligible for financial
assistance and to eliminate the requirement that housing projects receive approval from all taxing
jurisdictions before the IDA can award financial assistance thereto. The Housing Policy amendments
are arbitrary and capricious because they were done with the sole aim of permitting the Project,
which the Housing Policy would have otherwise prohibited, and because they violated the IDA’s
4. The IDA’s findings regarding the PILOT and its ultimate approval of the PILOT are
arbitrary, capricious, irrational, and unsupported by the record, in that they, among other things,
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incorrectly determine that the Project is eligible for financial assistance and fail to consider negative
5. The IDA’s actions with respect to the Project are also impermissible and tainted with
bias due to the conflict of interest of one of the IDA Board members, which at the very least creates
6. Due to the above, the IDA’s Housing PILOT Amendment and PILOT Approval must
be annulled.
PARTIES
7. Petitioner 61 Crown Street, LLC is a duly created limited liability company organized
in the State of New York which owns certain properties located at 61 Crown Street and 156-162
Green Street, identified as tax parcel numbers 48.330-3-10 and 48.330-3-28.100, respectively. These
properties are located in close proximity to the Project in the City of Kingston. Petitioner 61 Crown
Street, LLC is a resident of the City of Kingston, Ulster County, and a taxpayer of the City of
Kingston.
8. Petitioner 311 Wall Street, LLC is a duly created limited liability company organized
in the State of New York which owns certain property located at 311 Wall Street, identified as tax
parcel number 48.331-1-16. Petitioner 311 Wall Street, LLC’s property is located in close proximity
to the Project in the City of Kingston. Petitioner 311 Wall Street, LLC is a resident of the City of
9. Petitioner 314 Wall Street, LLC is a duly created limited liability company organized
in the State of New York which owns certain property located at 314 Wall Street, identified as tax
parcel number 48.331-2-10. Petitioner 314 Wall Street, LLC’s property is located in close proximity
to the Project in the City of Kingston. Petitioner 314 Wall Street, LLC is a resident of the City of
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10. Petitioner 317 Wall Street, LLC is a duly created limited liability company organized
in the State of New York which owns certain property located at 317 Wall Street, identified as tax
parcel number 48.331-1-15. Petitioner 317 Wall Street, LLC’s property is located in close proximity
to the Project in the City of Kingston. Petitioner 317 Wall Street, LLC is a resident of the City of
11. Petitioner 323 Wall Street Owners, LLC is a duly created limited liability company
organized in the State of New York which owns certain property located at 323 Wall Street,
identified as tax parcel number 48.331-1-13. Petitioner 323 Wall Street, LLC’s property is located in
close proximity to the Project in the City of Kingston. Petitioner 323 Wall Street Owners, LLC is a
resident of the City of Kingston, Ulster County, and a taxpayer of the City of Kingston.
12. Petitioner 328 Wall Street, LLC is a duly created limited liability company organized
in the State of New York which owns certain property located at 328 Wall Street, identified as tax
parcel number 48.331-2-4. Petitioner 328 Wall Street, LLC’s property is located in close proximity
to the Project in the City of Kingston. Petitioner 328 Wall Street, LLC is a resident of the City of
13. Petitioner 63 North Front Street, LLC is a duly created limited liability company
organized in the State of New York which owns certain property located at 63 North Front Street,
identified as tax parcel number 48.314-2-15. Petitioner 63 North Front Street, LLC’s property is
located in close proximity to the Project in the City of Kingston. Petitioner 63 North Front Street,
LLC is a resident of the City of Kingston, Ulster County, and a taxpayer of the City of Kingston.
Development Agency is a New York public benefit corporation established pursuant to the laws of
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15. Upon information and belief, Respondent-Defendant Ulster County (the “County”) is
a New York municipal corporation. The County would receive a portion of the payments made
16. Upon information and belief, Respondent-Defendant City of Kingston (the “City”) is
a New York municipal corporation. The City would receive a portion of the payments made pursuant
17. Upon information and belief, Respondent-Defendant Kingston City School District
(the “School District”) is a New York school district organized and existing pursuant of the laws of
the State of New York. The School District would receive a portion of the payments made pursuant
18. Upon information and belief, Respondent JM Development Group, LLC is a New
York limited liability company with offices at 2975 Route 9W South, New Windsor, NY 12553, and
19. Upon information and belief, Respondent Herzog Supply Co., Inc. is a duly created
New York business corporation with offices at 151 Plaza Road, Kingston, NY 12401, and the owner
in whole or in part of real property located at 9-17 N Front Street and 51 Schwenk Drive, identified
as tax parcel nos. 48.80-1-26 and -24.120, which is a portion of the Project Property.
20. Upon information and belief, Respondent Kingstonian Development, LLC is a New
York limited liability company with offices at 2975 Route 9W, New Windsor, NY 12553, and a
21. Upon information and belief, Respondent Patrick Page Holdings, L.P. is a New York
limited partnership with offices at 1613 Route 300, Newburgh, NY 12550, and a developer of and/or
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22. Upon information and belief, Respondent Blue Stone Realty, LLC is a New York
limited liability company with offices at 200 Fair Street, Kingston, NY 12401, and has an interest in
the Project.
23. Upon information and belief Respondent Wright Architect, PLLC is a professional
service limited liability company with offices at 200 Fair Street, Kingston, NY 12401, and has an
STANDING
24. Petitioners are injured by the IDA’s amendment to its Housing Policy and the
adoption of the PILOT Approvals because they benefit the Project and, according to Respondents’
claims, are required for the Project to move forward. The Project will impact Petitioners’ use and
enjoyment of their properties by constructing a large, mixed-use development that clashes with the
scale and character of the neighborhood – the National Historic Register-Listed Stockade Historic
District. Petitioners purchased their properties within the Stockade District because of its quaint,
historic character. The Project will permanently and severely alter the appearance, environment, and
overall character of the neighborhood. Petitioners’ properties within the Stockade District are all
within close proximity of the Project, and the Project will be clearly visible from Petitioner’s parcels
located on Wall Street (i.e., 311, 314, 317, and 323 Wall Street), as the northern terminus of the
street will now end at the unsightly entrance to the Project’s parking garage. The Project’s out of
character appearance and imposing presentation on Wall Street will adversely impact the character
25. Petitioners are further injured because the PILOT will decrease the taxes that would
otherwise be paid to the tax entities with jurisdiction over the Petitioners’ properties, namely the
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26. Petitioners have standing to pursue the claims asserted herein because they are
owners of real property in the Stockade District and have unique property and personal interests that
27. Petitioners also have common law resident taxpayer standing to pursue claims that the
IDA’s Housing Amendment and PILOT Approval impermissibly provide public benefits.
28. Petitioners own properties within the City of Kingston and County of Ulster, as
described above.
30. Petitioners further have standing to bring this action pursuant to General Municipal
Law §51 to prevent any illegal official act on the part of the IDA and its members.
31. Petitioners further have standing to bring this action pursuant to State Finance Law §
unconstitutional disbursement of state funds or state property. While State Finance Law § 123-b
does not apply to the authorization, sale, execution or delivery of a bond issue or note by an
Industrial Development Agency, the present action does not challenge such an authorization,
32. Petitioners further have standing to maintain a proceeding to compel a public body to
perform its duty and to correct arbitrary and capricious decision in relation to matters of great public
interest, particularly when failure to accord such standing would, in effect, erect an impenetrable
33. This Court has jurisdiction over this proceeding/action pursuant to CPLR Article 78
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34. Pursuant to CPLR §§ 7804(b) and 506(b), this proceeding is properly venued in New
York Supreme Court, Ulster County. Ulster County is the proper venue pursuant to CPLR §7804
and §506, since it is the county where petitioners and respondent IDA reside or maintain an office,
STATEMENT OF FACTS
35. The City of Kingston owns a parcel of land located in Uptown Kingston which was
formerly developed with a parking garage. Upon information and belief, in the spring of 2008 the
36. The municipally-owned site, tax parcel 48.80-1-26, now contains a surface parking
lot containing 144 publicly-available spaces to the north as well as a park located along its southern
boundary on North Front Street, between Wall Street and Fair Street.
37. On October 27, 2016, the City of Kingston Common Council published its “Request
for Qualifications #K16-10, Adaptive Development of Uptown Parking Sites for Mixed Use” (the
38. The RFQ sought responses “from qualified developers to design, construct and
operate a mixed-use development on three separate parcels owned currently by the City of
Kingston.” Ex. A at 1.
39. Upon information and belief, the Common Council awarded the RFQ to Respondent
40. The RFQ prohibited public officials from responding to the RFQ or having any
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41. Upon information and belief, the Project has been conditionally assigned to
Respondents JM Development Group, LLC, Patrick Page Properties, and Herzog Supply Co., Inc.
(the “Applicants”), who proposed the Project in its current iteration and submitted applications to the
City of Kingston Planning Board for the same on or about November of 2018.
42. The Project seeks site plan and special use permit approval from the City of Kingston
Planning Board. In addition, the Applicants sought and received subdivision approval from the
Planning Board to merge the properties identified as tax parcel nos. 48.80-1-25 & 48.80-1- 24.120.
43. The Planning Board has not yet granted site plan or special use permit approval for
the Project but did grant Preliminary Subdivision Approval for the Project on February 18, 2020.
44. The Applicants submitted an application for financial assistance to the IDA in June of
45. Under the PILOT agreement, the IDA would acquire title to the Project property and
construct the Project thereon, which would then be leased to the Applicants.
46. As the IDA is a governmental agency, when it takes title to the property, the parcels
will be exempt from real property taxation. As a result, the PILOT agreement will require the
Applicants to make payments in lieu of taxes to the affected taxing jurisdictions to account for the
fact that the property has become exempt from taxation. The amount of these PILOT payments is
determined in the PILOT agreement and is typically lower than what the property taxes would have
otherwise been. This effective decrease in taxes paid by the Applicants constitutes financial
assistance.
47. The PILOT agreement also grants the Applicants exemptions from sales tax and
48. In the present case, the estimated value of the financial assistance granted for the
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49. The IDA adopted a resolution on September 9, 2020 setting a public hearing for the
PILOT application.
50. Prior to the receipt of the PILOT application for the Project, the IDA had a strict
Housing Policy that prohibited the granting of financial assistance to most projects that include
51. Under the original Housing Policy, the IDA could only grant financial assistance to a
housing project if the project consisted of a continuing care retirement community or workforce
recreation facility.
52. The Housing Policy specifically stated that the IDA “will not consider low income,
senior housing, student housing (including, but not limited to dormitories), market rate or any other
type of housing project that does not” qualify as a continuing care retirement community project or a
53. The Project was plainly ineligible for financial assistance pursuant to the Housing
Policy because it was neither a continuing care retirement community project nor a workforce
54. This fact was brought to the IDA’s attention by various members of the public and by
Petitioners’ own representatives. See letter of V. Polidoro, Esq., dated July 17, 2020, a copy of
55. Thereafter, the IDA Governance Committee stated that it had decided to reconsider
the IDA’s Housing Policy. The proposed amendment to the Housing Policy would reverse the IDA’s
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established position with respect to residential projects that do not constitute a continuing care
retirement community project or workforce housing (the “First Housing Policy Amendment”). A
56. On September 9, 2020, the IDA Board of Directors voted to adopt the First Housing
Policy Amendment, which added the following paragraph to the Housing Policy:
“(E) Notwithstanding anything herein to the contrary, the Agency may consider
granting ‘financial assistance’ to any housing project, or any mixed-use project that
includes a housing or residential component, that has received the prior approval
from the governing board of Ulster County, and of each town, village, city and
school district in which the housing project is located.”
Ex. E at p. 2.
57. This initial change had the effect of allowing the IDA to grant financial assistance for
the Project, but only if it received the consent of all applicable taxing jurisdictions. In this case, the
58. The effect of this initial change was evident to the IDA upon its adoption.
59. During the August 4, 2020 Governance Committee meetings at which it was
discussed, Committee Chairman Ham confirmed that assistance could be provided only if “all the
60. During the August 12, 2020 Board of Directors meeting at which it was discussed, the
IDA’s counsel advised that the proposed policy would still provide the IDA discretion in ultimately
granting financial assistance, provided the prerequisite approvals from the taxing jurisdictions were
obtained, stating, “Even if you had the sign off of all of the taxing jurisdictions, your purview would
still be your own, your discretion would still be your own. But you wouldn’t act unless you had it.”
61. The IDA proceeded to request the consent of these taxing jurisdictions to the PILOT.
62. Prior to this amendment, on August 4, 2020, the City Common Council adopted a
resolution approving of the terms of the PILOT as presented to the City at the time. The terms of the
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PILOT changed significantly between the time of the City’s consent and the PILOT Approvals.
63. The City never consented to the terms and conditions of the final PILOT which is
subject to the PILOT Approvals, nor did the City ever consent to the PILOT after the First Housing
Policy Amendment.
64. On November 17, 2020, the Ulster County Legislature adopted a resolution approving
65. On December 2, 2020, the Board of Education of the School District adopted a
resolution disapproving of the terms of the PILOT. A copy of the minutes of the December 2, 2020
66. Due to the School District’s refusal to consent to the PILOT, the Project was not
67. On January 20, 2021, just months after it had adopted an amendment to its Housing
Policy and shortly after the School District disapproved of the PILOT, the IDA decided yet again to
68. This new amendment (the “Second Housing Policy Amendment”) added the
“(F) As described in (E) above, the Agency will attempt to obtain the prior
approval of each town, village, city and school district in which the housing project,
or any mixed-use project that includes a housing or residential component, is located.
In the event that the Agency is not able to obtain the approvals of all such entities,
the Agency may consider the granting of ‘financial assistance’ to such housing
project, or such mixed-use project that includes a housing or residential component,
without such approvals.”
See a copy of the Second Housing Policy Amendment attached hereto as Exhibit G.
69. The timing of this second amendment is not coincidental and the IDA’s claim that the
Second Housing Policy Amendment constituted routine housekeeping is hardly reasonable given the
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70. The IDA’s Bylaws state that the IDA Board’s Governance Committee is tasked with
71. The Second Housing Policy Amendment was never reviewed by the IDA’s
Governance Committee, in apparent contrast to the IDA’s stated policy and precedent.
72. The Second Housing Policy Amendment was never subject to a public hearing, in
73. The IDA Board of Directors adopted the Housing Amendment at its January 20, 2021
meeting.
74. Immediately after adopting the Second Housing Policy Amendment, the IDA adopted
the PILOT Approvals for the Project. Copies of the resolutions granting the PILOT Approvals are
IDA is to evaluate, among other things, the extent to which the development would promote and
maintain job opportunities, general prosperity, economic welfare, and standards of living.
76. That is, the purpose of a PILOT is to induce development of a project which will
77. The Applicants have claimed on the record before the IDA that the PILOT is needed
in order to account for the costs of the Project’s parking garage, and that the Project would be able to
move forward without financial assistance if the Project were not required to include the garage.
assistance to the Project should be limited to weighing the costs and benefits of constructing the
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79. The parking garage provides no benefit to the community because the Project will
result no net gain of available parking spaces for the residents of Uptown Kingston and Ulster
County.
80. The Kingstonian is being constructed on an existing surface parking lot which
contains approximately 144 parking spaces serving the businesses in Uptown Kingston.
81. The Project will replace the surface parking lot with a parking garage with 420 spaces
serving both the public and the needs generated by the Project, or 276 spaces more than the Property
currently provides. However, the Project would generate the need for at least 313 to 373 parking
82. Section 405-34J of the City of Kingston Zoning Ordinance requires 1.5 spaces for
each one-bedroom apartment and 2 spaces for a two- or three-bedroom apartment. The Zoning
Ordinance further requires one parking space for each hotel room with an additional space needed
83. The Project proposes a mix of one-, two- and three-bedroom apartments. Based on the
84. The Project’s hotel requires another 32 parking spaces plus spaces for employees.
85. Thus, a minimum of 283 parking spaces in the garage will be occupied by residential
86. The Zoning Ordinance requires one parking space for every 100 square feet of gross
floor area for a restaurant, and one parking space for every 300 square feet of floor area for retail.
The approximately 9,000 square foot commercial portion of the Project will therefore generate the
87. Using a conservative estimate, the minimum number of spaces needed to serve the
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Kingstonian is 313.
88. The proposed parking garage with 420 parking spaces is not sufficient to replace the
existing 144 public parking spaces and provide for the additional 313 parking spaces needed by the
Project. The Project will therefore result in net loss of publicly available parking spaces.
89. Essentially, though the number of parking spaces will increase, the residents of
Kingston will find themselves facing an even worse shortage of parking than presently exists due to
the fact that the Project will use up the vast majority of those new spaces, each of which will have
90. Petitioners reallege all the foregoing allegations set forth in this Petition with the
A. The PILOT Approvals Are Based on an Arbitrary and Capricious Amendment to the Housing
Policy
91. The PILOT could only be granted for the Project due to the Second Housing Policy
Amendment adopted immediately before the IDA issued the PILOT Approvals. The PILOT
approvals should be annulled as the IDA’s procedure in adopting the Housing Policy was arbitrary
and capricious and demonstrated that the sole purpose of the change in policy was to benefit the
Project.
92. Prior to the either the First or Second Housing Policy Amendment, the Housing
Policy unequivocally forbade the issuance of financial assistance to residential developments such as
the Project.
93. In adopting the First Housing Policy Amendment, the IDA attempted to create an
avenue for approvals specifically for the Kingstonian Project, assuming that the local taxing
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jurisdictions would consent to the issuance of the PILOT. In doing so, the IDA members recognized
the importance of obtaining taxing jurisdiction approval before providing financial assistance to
residential housing projects, as doing so remains controversial and is a significant departure from the
94. However, despite the IDA even going so far as to appear at a City of Kingston School
District Board of Education meeting in order to advocate for the Project on the Applicants’ behalf,
the Board of Education determined that the adverse impacts of the PILOT outweighed its benefits
95. As a result of the Board of Education’s disapproval of the Project, the IDA was
unable to grant the PILOT Approvals for the Project, as doing so would be in plain violation of its
96. The IDA was thereby forced to amend its Housing Policy yet again in order to
shoehorn in an exception for the Project. In effect, the IDA adopted the Second Housing Policy
Amendment in order to approve the PILOT without the School District’s approval.
97. The result of this rushed amendment is an irrational and absurd Housing Policy. The
text of the two provisions is nonsensical and creates a conflict, as subsection 2(E) of the Housing
Policy now states that the IDA is required to obtain the approval of local taxing jurisdictions to issue
financial assistance to a housing project, and subsection 2(F) of the Housing Policy now states that
the IDA can disregard the requirement of subsection 2(E) in any situation and without offering any
98. Whereas the First Housing Policy Amendment was subject to discussion at meetings
of both the Governance Committee and Board of Directors, the Second Housing Policy Amendment
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99. The Second Housing Amendment lacks any rational basis and was clearly adopted for
100. The only justification offered for the Second Housing Policy Amendment is that the
IDA purportedly intended to have the involvement of taxing jurisdictions in granting assistance to a
housing project mirror the involvement of taxing jurisdictions when the IDA pursues a deviation
from its Uniform Tax Exemption Policy (“UTEP”). However, the application already constituted a
deviated PILOT when the First Housing Policy Amendment was adopted. Surely, if making the
processes the same was the IDA’s intent, it could have and would have done so during the first
amendment.
101. Moreover, there is no requirement that the procedures for consulting with taxing
jurisdictions within the Housing Policy and the UTEP be equivalent. Rather, this is a red herring to
distract from the fact that the IDA previously discussed and approved of a requirement that such a
102. The IDA members openly and clearly discussed the requirement and understood its
impacts when they adopted it. The IDA has offered no rational basis for its sudden change in policy,
103. Pursuant to the above, the IDA’s actions in adopting the Second Housing Policy
Amendment were irrational, arbitrary, and capricious, violated its own procedure, and the Second
B. The PILOT Approvals are ultra vires, arbitrary and capricious, and not based on substantial
evidence.
104. The purpose of a PILOT is to induce development of a project which will have a net
positive effect on the community. This requires a careful weighing of a project’s costs against its
benefits.
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105. The Applicants have claimed on the record before the IDA that the PILOT is needed
in order to account for the costs of the Project’s parking garage, and that the Project would be able to
move forward without financial assistance if the Project were not required to include the garage.
assistance to the Project should be limited to weighing the costs and benefits of constructing the
parking garage.
107. However, the Project will result in a net loss of parking, as described above, meaning
the aspect of the Project requiring financial assistance will harm the community it is meant to serve.
108. The PILOT Approvals ignore this effect of the Project and lack a rational basis. The
Approvals gloss over these impacts of the Project and instead make boilerplate findings that the
109. Beyond the impacts to parking, the Project PILOT will have a severe and lasting
110. School districts are primarily funded by property taxes and state aid. Property taxes
are levied against the Full Taxable Value of real estate and its calculation is subject to the NYS
111. Annually, each school district follows a formula to calculate its Tax Levy Limit
(“TLL”). The TLL does not change when there is a change in the taxable value due to assessment
increases; in that instance, the tax rate decreases. However, when there is significant new project
construction, the NYS Commissioner of Tax and Finance calculates a Tax Base Growth Factor
(“TBGF”) that increases the TLL to pay for services arising from the new construction.
112. Revenues generated from PILOT agreements remove tax revenue that the school
district would otherwise receive and have the effect of reducing the tax cap levy in the year in which
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113. When a new project is subject to a PILOT agreement, its taxable value is never
114. The reduction in the tax levy cap adversely limits the District’s ability to raise taxes to
accommodate the needs of its students. This impact is further exacerbated when, as in the case of the
Project, the development contains residences which would bring additional students to the district
115. Under the terms of the proposed PILOT, the Applicants would pay approximately $2
116. In comparison, if the project was fully taxed with an assessed value of $19 million at
year 1 and the School District’s 2019-2020 TLL of $105,589,983 escalated 2% annually, the
117. This harm is perpetual. During years 26 through 50, after the term of the PILOT
agreement has finished, the school district could see $23.8 million less in TLL because of the PILOT
since the tax cap formula’s TBGF never adjusts, even at the end of a PILOT’s term when properties
become taxable.
118. Unlike the City’s budget, which is adopted by resolution of the City’s Common
Council, the School District’s budget must be approved by voters of the District. This distinction
makes the Board of Education accountable to the community’s taxpayers in a vastly different
119. While the City can increase taxes in order to make up for the shortfall caused by the
incentive offered to the Applicants with relative ease, the School District faces the daunting task of
asking its constituents to support an increase in taxes in order to make up for a tax abatement offered
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to the Applicants.
120. Even if a development may have incidental beneficial economic impacts to the
community, there remains no justification for a PILOT that does not even help a project achieve its
121. The negotiation of such PILOT terms by the IDA is an abuse of discretion, is not
122. Petitioners reallege all the foregoing allegations set forth in this Petition with the
123. The PILOT Approvals must be annulled due to the impermissible conflict of interest
124. Pursuant to General Municipal Law (“GML”) § 883, “All members, officers, and
the public authorities law shall be subject to the provisions of article eighteen of this chapter.”
125. Article 18 of the GML governs conflicts of interest among municipal officers and
employees.
“[N]o municipal officer or employee shall have an interest in any contract with
the municipality of which he is an officer or employee, when such officer or
employee, individually or as a member of a board, has the power or duty to
(a) negotiate, prepare, authorize or approve the contract or authorize
or approve payment thereunder
(b) audit bills or claims under the contract, or
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127. “Contract” is defined to include an agreement with the relevant governmental body.
GML § 800(2).
municipal officer or employee as the result of a contract with the municipality which such officer or
employee serves.” GML § 800(3). A municipal officer is deemed to have an interest in a contract of
employee, and corporations of which the officer is an officer, director, employee, or shareholder.
GML § 800(3).
129. In this instance, IDA Board member Daniel Savona has an impermissible interest in
the PILOT agreement approved by the PILOT Approvals and to be entered into by the Applicants
130. Upon information and belief, Daniel Savona is the Managing Partner of the Savona
Restaurant Group, which owns and operates five restaurants in the City of Kingston, Town of Ulster,
and Town of Red Hook, New York. See attached as Exhibit I the IDA resume of Daniel Savona
describing his occupation. Among these restaurants is Savona’s Plaza Pizza. See attached at Exhibit
J a printout from the Savona’s Pizza website depicting the restaurant and providing the address
thereof.
131. Furthermore, upon information and belief, Plaza Pizza is the business name of Savona
and Sons Inc. See attached as Exhibit K an excerpt from the Westchester Business Journal December
22, 2014 edition stating that Savona and Sons Inc. does business as “Plaza Pizza” in Kingston, New
York. Daniel Savona of Kingston, New York is listed as the Chief Executive Officer of Savona and
Sons, Inc. See attached as Exhibit L the entity information for Savona and Sons, Inc., accessed via
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the New York State Department of State website on January 27, 2021.
132. The Project would, among other things, construct a walking bridge that extends north
over Schwenk Drive to connect the Kingstonian (and indeed the entire Stockade District of Uptown
Kingston) to the Kingston Plaza located directly north of the Project site. See attached as Exhibit M
an excerpt of the Applicants’ Project literature describing the proposed connection between Uptown
Kingston and Kingston Plaza. See also, attached as Exhibit N an excerpt of the Downtown
Revitalization Initiative Strategic Investment Plan for Kingston, in which the New York Regional
Economic Development Council states that one of the goals of the State’s investment in Uptown
Kingston is to “[i]mprove connections between the Stockade Historic District and Kingston Plaza.”
133. Kingston Plaza is owned by one of the Applicants, Herzog Supply Co. Inc.
134. Upon information and belief, Plaza Pizza, operated by Daniel Savona, is a tenant of
Kingston Plaza and the Applicant Herzog Supply Co. Inc. is Plaza Pizza’s landlord.
135. As a result of the construction of the pedestrian walkway, which is designed to bring
new customers to the Kingston Plaza from Uptown Kingston, Plaza Pizza will directly and
136. In turn, Mr. Savona, as Chief Executive Officer of Savona and Sons Inc., d/b/a Plaza
Pizza, will receive a direct pecuniary benefit from the Project, as it is designed in part to funnel new
137. Therefore, Mr. Savona has an interest in the PILOT agreement between the
Applicants and the IDA, which will allow the Project to come to fruition.
138. By participating in the discussions regarding the PILOT and by voting in favor of the
PILOT, Mr. Savona played a direct role in the IDA granting the PILOT Approvals and thereby aided
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139. The financial benefit Mr. Savona will receive by the Project being developed
constitutes an interest in the IDA’s PILOT agreement for the Project and is prohibited under GML
§801.
140. Furthermore, it follows that Plaza Pizza would expect an indirect financial benefit
from the development of the Project as well. One of the Applicants, Herzog Supply Co. Inc., is the
lessor of the space occupied by Plaza Pizza. The granting of the financial assistance to the
Applicants by the IDA would have a direct financial impact on Plaza Pizza’s landlord. This would
affect Herzog Supply Co. Inc.’s financial well-being, which, in turn, may affect the levels of rents
the lessor needs to demand of its tenants. The issuance of the PILOT may result in the rent for Mr.
Savona’s restaurant staying at its current amount, or at least, not increasing as much as it may have
otherwise.
141. Pursuant to GML § 803, Mr. Savona was required to publicly disclose the nature of
this interest and the extent of such interest in writing, which is to be set forth in the official record of
142. Upon information and belief, no such disclosure was made or set forth in the IDA’s
143. Pursuant to GML §804, “[a]ny contract willfully entered into by or with a
municipality in which there is an interest prohibited by this article shall be null, void and wholly
unenforceable.”
144. The PILOT Approvals are therefore void, as the IDA is barred from entering into a
145. Finally, in addition to the provisions of the General Municipal Law referenced above,
there is a common law requirement that municipal officers conduct themselves so as to avoid even
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146. There exists an appearance of impropriety due to the financial interests Mr. Savona
has in the Project, as outlined above. In addition, though it may not occur, there exists the possibility
that Mr. Savona’s landlord would increase his restaurant’s rent out of retribution if he were to choose
not to support the PILOT. This appearance of impropriety is inappropriate and lessens the public’s
faith in government
147. Even if Mr. Savona’s vote was not needed to approve the PILOT, his participation in
the discussion of the PILOT has impermissibly tainted the proceedings, which may have persuaded
other members.
148. For the foregoing reasons, the IDA proceedings for the Project have been
impermissibly tainted with bias due to a conflict of interest and must be annulled.
149. Petitioners reallege all the foregoing allegations set forth in this Petition with the
150. Pursuant to the above the actions of the IDA and its Board members with respect to
the granting of the PILOT Approvals for the Project are impermissible and contrary to law.
151. The PILOT Approvals thereby violate General Municipal Law § 51.
152. Petitioners reallege all the foregoing allegations set forth in this Petition with the
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153. On June 3, 2019, after having received site plan and special use permit applications
for the Project, the City of Kingston Planning Board established itself as Lead Agency for the Project
pursuant to SEQRA, meaning that it would perform the requisite environmental review of the Project
in order to determine the Project’s potential to adversely affect the environment and whether
additional environmental reviews of the Project were necessary. If the Project has even the potential
for a significant adverse environmental impact, then the lead agency must adopt a “Positive
Declaration” requiring that a Draft Environmental Impact Statement be prepared to analyze and
mitigate the impacts. It is only when an action does not have the potential for any significant adverse
impact on the environment that a Negative Declaration may be adopted. 6 NYCRR 617.7(a).
154. On December 16, 2019, the Planning Board adopted its Negative Declaration, finding
that the Project does not have even the potential to have a significant adverse environmental impact.
155. The IDA is an involved agency under SEQRA and is bound by the Planning Board’s
environmental review for the Project because the Planning Board performed a coordinated review
156. However, the Planning Board’s decision to adopt a Negative Declaration is flawed
because the Planning Board failed to comply with the procedural and substantive requirements of
SEQRA.
adoption of a Negative Declaration for the Project. See Index No. EF2020-253.
158. The proceeding challenging the Negative Declaration is pending, but if Petitioners are
successful in that matter, then the Negative Declaration for the Project will be annulled.
159. No agency involved in an action may undertake, fund or approve the action until it
has complied with the provisions of SEQRA. 6 NYCRR 617.3(a). If the Negative Declaration is
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annulled, then the IDA would be barred from taking any action with respect to the Project until a
WHEREFORE, Petitioners respectfully request that the Court enter an Order and Judgment
awarding Petitioners such further and other relief as the Court shall deem just and proper.
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