A futile BID

Business group pessimistic about changing Kingston’s dual system of assessments

by Jesse J. Smith
October 14, 2010 02:14 PM | 0 0 comments | 14 14 recommendations | email to a friend | print
Nancy Donskoj.
Nancy Donskoj.
A Kingston business group said that it has made great strides since hiring a “Main Street Manager” using federal entitlement money. But, according to leaders of the Business Alliance of Kingston, one of the group’s key goals — forming a Business Improvement District — remains out of reach until something is done to address the disparity between residential and commercial tax rates.

That assessment was laid out by BAK leaders at a meeting of the Common Council’s Audit Committee last month. The review comes one year after the business group obtained $100,000 in a Community Development Block Grant to initiate a Main Street Manager program, with the goal of promoting business in Kingston. The money was intended to last for two years, after which the business group must either find new funding sources or pull the plug.

“We have to rethink what we can do with the Main Street Manager project,” said Kevin Quilty, president of the Kingston Uptown Business Association and a BAK board member. “We’ve built up some momentum, and we don’t want to lose it.”

That momentum began with the hiring of downtown gallery owner Nancy Donskoj as program coordinator back in June 2009. Donskoj has overseen dozens of initiatives, ranging from a design charrette to envision a new use for a decrepit Broadway motel to a new website to let visitors know what’s happening in Kingston. Most recently Donskoj oversaw the installation of 80 color-coded banners which guide visitors through the city’s three business districts.

“It’s going pretty well,” said Donskoj, assessing the past year’s marketing efforts. “I’ve always thought that tourism was actually a good revenue generator for the city, and now were seeing people visiting Kingston from all over. It’s working.”

Midtown Business Association secretary and BAK board member Pat Courtney Strong said that Donskoj had done a good job with one of the alliance’s chief goals, knitting business leaders in the three business districts into a more cohesive community with a broader vision for commerce in Kingston.

“She’s indefatigable, she’s about solving businesses’ problems, and she takes the overview,” said Courtney Strong of Donskoj’s efforts.

But when it comes to one of the goals laid out during the development of the Main Street Manager program, creating a city-wide Business Improvement District or several local BIDs, BAK officials are far less optimistic. A BID is, in essence, a business association with a funding stream provided by mandatory assessments levied on commercial property owners within a specified area. The money pays for business-friendly amenities like private security around shopping districts, decorative street furnishings or marketing campaigns. While leaders of the business alliance say that BID could do much to boost the city’s commercial sector, high taxes on commercial properties essentially closed the door to a BID.

“We have a preliminary plan for a BID, but all the plans in the world don’t add up to a hill of beans when you’re asking people to do more than their fair share,” said Courtney Strong. “We can’t make the case for a BID to ourselves right now, much less the broader community.”

The city’s homestead/non-homestead system of taxation establishes different tax rates for commercial and residential properties. Over the years the rates have become skewed as commercial properties become a smaller and smaller proportion of the city’s total assessed value. According to City Assessor Mary Ann Bahruth, commercial properties make up about 31 percent of Kingston’s total assessed value. Under the non-homestead tax rate, owners pay about 48 percent of the total tax levy. In 2010 residential property owners paid $10.8 per $1,000 of assessed value while the non-homestead rate was $17.25 per $1,000.

Following a city-wide revaluation in 2008, Mayor James Sottile proposed shifting the tax rate to a system which better reflected the value of commercial properties in the city. The Common Council put forth its own plan to gradually equalize the tax rates over five years. Neither plan came to fruition. Lawmakers faced criticism from residential property owners who faced higher tax bills under a more equitable system.

Alderman Charlie Landi said that he had voted against the dual tax rate when it was introduced in the late 1980s because he feared that it would drive business out of Kingston. But now, Landi said, reform would be nearly impossible. “We should never have done it,” said Landi. “But now we’re in a spot where it cannot be changed without a devastating impact to the residential segment.”

Business leaders argue that the flight of commerce from Kingston to lower-taxed outlying areas does damage beyond the commercial sector. Every time a business leaves town or shuts down, they point out, a greater share of the tax burden is shifted onto residents.

“If the business community continues to deteriorate, it’s going to bring down home values,” said Courtney Strong. “This is not us versus them, this is about shoring up everybody’s investment in Kingston.”

Despite the dim prospects for tax relief for commercial property owners, leaders for BAK say that the Main Street Manager program has shown its value. Quilty said that the program would focus over the next year on the Midtown corridor, which, he said, was a key component in any effort to boost business in Kingston because it was a connector between the city’s Uptown and Rondout districts.

“If a BID isn’t going to fly, then what can we do?” asked Quilty. “That’s what we’re entertaining now.”

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