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WPCNR COMMON COUNCIL CHRONICLE-EXAMINER. August 8, 2008 UPDATED 10:05 PM EDT: The Common Council at a special meeting  lasting over two hours today from 8 A.M., approved the 55 Bank Street LCOR 80-20 Affordable Housing apartment Phase I and Phase II construction and financial plan today 6-0, with Councilman Benjamin Boykin absent. The first look at a new site plan is expected in 12 weeks or so, Councilman Glen Hockley said, who proved correct in handicapping the sentiments of the Council last night.

 

Councilman Glen Hockley speaking to WPCNR today said “It was touch and go for awhile. Two councilpersons wanted to table it, but after a while all questions were answered and we are moving forward.”

 

He told WPCNR that the Fisher Hill and Battle Hill Associations were not in favor of the 13 story parking garage, and neither was he. He said an amendment was added to the agreement approved today separating the parking garage site plan from the site plan for the residential/retail part of the complex so the two site plans would be considered separately.

Hockley said LCOR would pay the $5 Million it owes the city for the land towards the middle or the end of September, which it has withheld from the city since June 30, holding it in escrow.

Hockley said he had introduced Caral Greenblatt of the Fisher Hill Association to Peter Gilpatric of LCORE, and said it was important that LCOR work closely with both neighborhoods on the design of the garage and the apartment complex and consider their concerns. “They don’t want to be walled in,” Hockley said.

PILOT for Hotel Might Come Up, Not Ruled Out.

Hockley said LCOR revealed they were in talks with a hotel which they were going to see today, but had postponed it until next week. During the meeting, Hockley said the fact came out that the Ritz Carlton hotel was 100% occupied, and LCOR took this to mean hotel business is good in White Plains and the project was viable. Hockley said, “It (the hotel possibility) sounds a lot more solid than it did.”

LCOR has promised  before to build a  mythical hotel on the original Bank Street Commons for about eight years, frequently saying they were in talks.  Some of the Council this morning, according to Jim Benerofe reporting on WHITE PLAINS WEEK today questioned how real the $28,000,000 in property taxes the long-promised hotel is in figuring the return on the project to the city in light of the $50 Million in tax abatement over 24 years of the project.

The Ritz-Carlton figure of 100% occupancy was given out at the meeting, Benerofe also said.

Asked if LCOR indicated they would require a PILOT (Payment In Lieu of Taxes) on any hotel project from the city in addition to the $50 Million (over the next 24 years) they received as of this morning’s vote, Hockley said “The indication I got was only that the hotel is on. I imagine that (a PILOT agreement) will come up.”

Paul Wood, the Mayor’s Executive Officer told WPCNR Friday evening that this would not happen because hotels in New York are not permitted to receive Payments In Lieu of Taxes arrangements.

“I’m very pleased  we were able to move this along,” Hockley said.

 

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WPCNR THE DEVELOPER NEWS. By John F. Bailey. August 7, 2008 UPDATED 9 PM EDT: City Hall explained today that the LCOR $50.5 Million tax abatement the Council is going to consider giving LCOR Friday morning as the compensation for the $27 Million cost of building 107 affordable housing units, saying the abatement gives LCOR a return over 24 years equivalent what they could earn on the money if they invested that $27 Million sum elsewhere today over  24 years.  A councilman tonight predicted the council would move to approve Friday morning at the 8 AM meeting.

Meanwhile, unlike City Hall which was sent questions by WPCNR, five of six councilpersons did not answer or respond to WPCNR e-mails  sent at midday, querying whether they felt they had enough information to make the decision, whether they would vote Friday morning, and whether the contract they were voting on would reflect the numbers exactly as described in the financials.  Glen Hockley, the only councilperson who did, expects swift passage of the PILOT agreement

Councilman Glen Hockley at Common Council last Monday evening when “financials” were Introduced.

 Councilman Glen Hockley told WPCNR tonight he expected the council would pass the LDA agreement tomorrow morning because “we need the $5 Million,” and  said he’d be voting for it because the affordable housing was needed, and the developer had come up with a  workable solution to a bad market situation, and in his opinion was not using the $5 Million payment as leverage.

“It’s one of the incentives to have this development take place (the $ 5 Million payment).”

Hockley said he had concerns about the project moving forward: “Number 1 the parking. I think there’s some concerns about the 13 story parking lot and that’s going to be scaled back a bit. It can’t be built that high. I’ve heard enough from the neighborhoods to say they don’t want to be walled in that way. The parking is needed. A 13-story garage is not needed. The rest of the project is certainly necessary, lower income housing is involved. The city’s portion of the money is needed…plus the jobs that come from it.”

Asked if LCOR had given the city any reason why they did not pay the $5 Million on time, Hockley said, “I think they didn’t have the money available at that time.  They did not get the financing they needed.They looked to push it (the $5 Million payment) off.”

Commissioner of Planning, Susan Habel — at the Council meeting last Monday night.

 The $50.5 million in tax abatement, the Commissioner of Planning Susan Habel explained,  is the equivalent of a 4.5 % return on the $27 Million to build the affordable units, at present value over the 24 years, on an inflation rate of 4.2% for each of those years.

The bottom line remains the same:  the city, school and county do not collect $50.5 Million in  gradually inflated dollars over 24 years, although the city school and county do collect $27 Million, $52 Million and $16 Million respectively over the 24 year journey to full tax payments.

 

Paul Wood, City Executive Officer, pointed out the city will be receiving taxes on the land for the project, which previously had not been earning any tax dollars, with the land generating $28.8 Million in taxes.  Mr. Wood also clarified that the 6.6% increase in the tax rate per year was based on the assump that the county, city and school district tax rates per $1,000  (currently $1.29, $1.47, and $5.03 respectively) of assessed value would increase 6.6% on average.

Ms. Habel said part of the tax model for figuring the taxes on the as-yet undesigned 55 Bank Street two phase project was $4,100 a unit based on the $4,200 a unit now being paid in taxes by Avalon on Church and Barker  now in the final stages of completion, which by WPCNR calculations works out to $2,251,200 in full taxes for the two phases at this time if they were completed.

The full tax payment when 55 Bank Street  Phase I and Phase II properties are completed by 2033 is $9.3 Million a year according to the PILOT agreement. She said the tax rate increase was figured as 6.6% a year.

Not more, just more units explanation for Abatement

The Commissioner of Planning noted that WPCNR’s observation that the Phase I Phase II “new deal” was more than the previous abatement on the same number units was mistaken because the previous project numbers were computed using a number of units assuming only 75 units of affordable housing which computed to $42.8 Million in revenue.

Asked why the 107 unit 24 year project which has been in the works since May of 2007 would use as its basis a 75 unit, 18 year projection, Ms. Habel explained that at the time the city and LCOR were attempting to figure how many  affordable units could fit on the site and they were trying various combinations. Habel also said the construction cost of affordable units had risen.

Ms. Habel questioned WPCNR’s computation that the new units were costing $421,000 a unit to construct taking into account the cost of the abatement. WPCNR pointed out that if you go on the cost of the abatement of $50,000 that’s what it costs the city. Ms. Habel said that was not the way to look at it, explaining:

 She pointed out that the Kensico Terrace project is paying  $264 a unit (42) in taxes today and the Hortons Mill project was paying a $536 a unit (17 units) in taxes today.

 

She recalled  “Analysis was based on 75 units, we were going back over different deals, what would the deal be, what number would we work with, so we worked on 75 (affordable units). It wasn’t 107 unit approved until the LDA (Land Distribution Agreement) was approved by the Council in June. It was not fixed (at 107). I made the assumptions based on working with LCOR and we did 75. We weren’t sure how many we were talking because we didn’t know how many units we could fit on the site. So we had a theoretical number which thought we would get to and we ultimately did get to. The council was happy, they wanted more affordable units. 75 was 20% the number we could make work on the site at the time 375 units. At that time we were talking bigger office on the site. A lot of things were being thrown around.”

She noted the reason for the $50 Million tax abatement:

“They (LCOR) have to build the units with current dollars. The benefit they get is over 24 years. They are not getting the benefit of the cost of what they put into this until way out in the future. Do you know what a dollar is worth 24 years from now? About 7 or 8 cents. What we have to do is a net present value of that stream of tax relief that they get in the future. We did it on the 4.5, anticipated annual inflation a year over a 24 year period.  That was determined a year ago.

“What could they do? If they invested that money in a reasonable return on a real estate investment which would be 4.5. Over 50 years they would earn $50 Million dollars. So you discount the abatement back. That’s what the 80-20 program is all about. It’s saying, they’re building all these affordable units what does it cost them and how do we encourage them to do this to accept this cost that will never give them a positive return because they’re rent restricted. You give them an abatement allowing them to get a return on that investment over a long period of time. They don’t get a full return until 24 years out. It has a value to them as if we wrote a check to them for $27 Million now.

Why are they willing to wait to get a return? I know dollars are going to be hugely more expensive. They want to know when they go to a lender, and he says My God you’re throwing 26 million into this project that will not give you a return while this project is operating. Do you think  a lender is going to lend you money? The only reason the lender is willing to give you money is that you say I’m getting a tax abatement over time so the cost of doing that will be compensated.”

“We’re getting taxes of over $50 Million and the value of that abatement is approximately equal to the cost of them to build the rent-restricted affordable units. “

Affordable Housing is Expensive.

 She pointed out that the Kensico Terrace project is paying  $264 a unit (42) in taxes today and the Hortons Mill project  — two totally affordable housing developments recently opened — were paying a $532 a unit (17 units) in taxes today.

“You are absolutely right. You have just hit on an absolute truth.  It is very expensive to build affordable housing. John Saracino is coming back for more help from the city for the cost of Horton’s Mill. Bill Brown it took him seven years.”

Ms. Habel is right.

According to the taxes paid by Kensico Terrace ($11,088) it will take Kensico 77 years to pay back the $848,497 the city gave them out of housing funds to help finance the projec t.

On the Horton’s Mill project paying $9044 in taxes a year, it will take them 36 years to pay back the $327,420 the city gave them to help finance the project

 More abatement to come?

The LCOR project as an 80-20 project (20% affordable housing) could apply to the New York State Housing Finance Agency for further tax credits on the project, allowing federally tax-exempt private activity bonds to finance qualified residential rental projects.  

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WPCNR QUILL & EYESHADE. By John F. Bailey. August 6, 2008 UPDATED 12:30 A.M. With Financials  Updated with Financials Clarification August 7, 2008: LCOR, developer of the financially high and dry 55 Bank Street 80-20 affordable housing project will get $50.5 Million in tax abatements in their new 55 Bank Street deal with the city expected to be approved Friday morning.

 

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LCOR presenting their preliminary site plan for the new 55 Bank Street Two Phase Affordable Housing and market rate complex  Monday evening. The Council delayed approval pending receiving written financials. Tuesday evening they arrived. The media received copies Wednesday.

The $50.5 Million in tax abatement is $31 Million more in tax relief over the 24-year life of the project more the $29 Million in tax abatement it would have received on the original  One-Phase two tower 55 Bank project  the developer said was unable to be financed in today’s credit climate. 

In an explanation for this today from city hall, it turns out that the original figures for the previous project, that consisted of $42.7 Million in total taxes and revenues were based on 75 affordable units and not the 107, and going out 18 years, instead of the current 24 years under consideration. A fact that was noted until it appeared in the financials Tuesday evening and was easy to miss.

This explains part of the escalation of the abatement.

 One, the agreement goes out 24 years, not 18. 2.) Revenues were estimated as $42.7 earlier, and a lower rate of return was used. 3.) There were 32 less affordable units in the first two-tower project.

The tax abatement on that first agreement was figured at $29 Million which brought the value of that configuration to $71.7 Million over 18 years at less units. Six more years of inflation are added at 4.5% a year raising the abatement to $36,000,000, and you have to compute the extra amount of cost on 32 more units as $14 Million in change to make up the rest of the abatement. All becomes clear.

However the project has always been publicly talked of  as a 107 affordable unit project with 536 units. Confusion on the financials city hall said today was that the number o affordable units had changed considerably, and 75 had been the working figure during discussions.

This was stated in the financials to the Westchester Industrial Development Agency that signed off on the original project that would receive $29 Million in tax abatement, which we learned in the new financials was based on 75 units.

The total tax abatement on the LCOR rental/affordable housing experiment on bank Street will cost the city $50.5 Million in taxes for 107 affordable housing units over the life of the PILOT ending in 2033

 

Former White Plains Mayor Alfred Del Vecchio  said the financials as described at the meeting were not too clear and urged the Common Council to get a copy in writing before approving the agreement. The Council postponed the vote on approval of 55 Bank as a Two Phase project with a $50.5 Million tax abatement until Friday morning, pending the financial details.

$5 Million to Come.

LCOR is currently holding in escrow with interest the $5 Million in the second payment on the property where the project is to be built, which they apparently say will be paid in late September (three months late). No explanation has been given why the payment was delayed to date.

The 5-page financial shows that by breaking up the 55 Bank Street project into two phases, LCOR, the developer will save $50.5 Million in property taxes over the next 25 years, about $2.25 Million a year, while the city, school district and county will receive $51,726,925 in taxes out of an estimated full property tax estimate of $102,240,681.

 

The city anticipates $51.7 Million in taxes (Payments In Lieu of Taxes) to the city, school and county  taxes according to the  financials report. 

The Commissioner of Planning explained today that the abatement is based providing property tax relief that would give the developer back an equivalent return on the money it costs them to build the affordable housing units in today’s dollars if it was invested for the 24 year period elsewhere. The Commissioner, Susan Habel,  said this abatement makes the project more attractive to lenders for the project that is having problems financing in the present market.

“Phantom Hotel” Funds Half the Tax Payments

The “tax profit” comes from from anticipated revenues making up the abatement from the as-yet unsigned hotel project ( taxes from the hotel are estimated as $28 Million, presuming the hotel is built), $1,000,000 in full tax on retail, $5.7 Million on additional market rate units  and $8.8 Million in the parking fee to the city, and the full tax on the land

The “Preliminary Site Plan” which has gone from a design layout two weeks ago to being described as a mass blocking plan, with an official site plan to come later after approval of the Two Phase Deal and new tandem PILOT agreements on Friday’s agenda. An official site plan would be due in January 2009 if it were to be approved by the Council Friday morning.

LCOR has consistently refused to name the hoteliers they have been close to a deal with for months, and the Common Council has failed to ask whom the developer is negotiating with on the hotel and how real the negotiation talk is to being consummated.

Timing

The New Deal taxes LCOR on the full value of the land beginning from Year 1 over 24 years through 2033 when the properties become fully taxable realizing $28.6 Million in taxes.

The city projects the full amount of Payments In Lieu of Taxes for the full 24 years as $51.7 Million plus $43.4 Million in other revenues over the 24 years as $95.2 Million. If you deduct the total tax abatement of $50.5 million, the city, school and county realizes $45 Million in taxes over 24 years, or $2 Million a year in taxes for the entire two phases if built.

Completion

Readers should note that Phase I – reported to consist of  construction of the first building and partial construction of the garage providing parking for all rental units in the first phase, and parking for the hotel and some retail,  is scheduled to begin in 2011, and be completed in 2013, and will return to full value on the tax rolls by 2028, when this reporter will be 83 years old.

Phase II construction, consisting of the rest of the garage and the other two residential buildings according to the site plan increases to full tax equivalent 2029 to 2032, at which time this reporter will be 87 years old. 

The Old Deal

The previous 536-unit  55 Bank Street Deal agreed to on approval in 2007, was to cover 18 years and  the 107 units created $22 Million in taxes from the Residential component and anticipated $20.8 Million in taxes and revenues from other sources for a total of $42.8 Million in taxes through 2025.

 The total value of the tax abatement of that deal was $29 Million, according  the city calculation, leaving a tax “profit” of  $13 Million for city, school and county.

This indicates the city makes an additional $32 Million in tax payments. ( That is computed by taking the $45 Million tax handle in PILOT payments under two phases, subtracting $13 Million in tax profit after abatement is subtracted from the one phase project) with the two phase project.

Assumptions 6.6% Increase In Tax Rate a Year Lifts abatements.

The financials assume a property tax  rate increase of 6.6% per annum. This is based on the Average Annual Property Tax Rate Increases of 4.1% for the City, 8.1% for the School District and 5.29% for Westchester County over the last fifteen years.

Take the first year the  PILOT kicks in on Phase I  scheduled for 2014.

LCOR pays PILOTS beginning when a Building Permit is taken out  in 2011.

In that first year of the Phase 1 Project they pay $290,725 in a PILOT payment when they take out the Building Permit/ which is equivalent to the full taxes on the land. When they occupy the building three years later in 2014, a tax abatement of $1,115,211 is deducted from the full tax payment of $1,467,382 for that building, creating a PILOT payment of $352,171. The Abatements rise until 2024, when the rise at 20% a year to come up to a full tax payment of $3,827,377 in 2029. You will note the same occurs for the Phase 2 Project only it reaches full tax payment in 2032.

Each year out to 2024, the amount of abatement increases against the Full Tax. In 2024 the abatement amount starts to decrease at the rate of 20% to bring the Phase I building up to full tax.

The financials did not make clear whether inflation factors other than those assumed in the 6.6% property tax increase annually over 24 years  were used for city, county, and school expenses were filtered into the calculations.

$471,000 Cost per Unit of Affordable Housing Beats

 median price of a Westchester Condo: $400,000.

 

The tax abatement sets a high watermark in the cost of building one affordable housing unit: $471,963 based on lost tax revenue for each of the 107 “affordable housing” units LCOR will make available (half to be completed in Phase I  by 2014 and the other half in Phase II by 2018). 

Previously affordable housing unit costs built within the last five years in White Plains ranged from $285,000 per unit when first proposed (which included a $848,497 city grant out of the housing fund)  for the 42-unit Kensico Terrace to $335,000 a unit  for the 17 Horton’s Mill townhouses, (including a $327,474 city grant) based on cost of the entire project.

The Commissioner of Planning said today that Kensico Terrace now pays $265 a unit (42) in taxes.

 This means it will take Kensico 76 years to pay back the city grant (in cheaper dollars).

Horton’s Mill pays $532 a unit according to the Commissioner on 17 units.

It will take Horton’s Mill 36 years to pay back the city their grant in taxes in cheaper dollars.

The cost per unit in the 55 Bank Street project is put by the city as being $221,000 to construct each affordable unit (107) in 2008 dollars.

However, if you consider the total tax abatement on the project to create the 107 affordable units ($50.5 million)  the cost per unit put another way – another way of looking at the number –is $472,000 per unit, though the Commissioner of Planning said Thursday that is not the way to look at, saying that the abatement makes the project more attractive to potential lenders.

The city could take that $471,000 per unit and purchase condominiums on today’s market to fill affordable housing “gaps.”

Developer Perks

The developer appears to make a $251,000 tax savings “profit”  on every affordable unit.

 By the time one of the buildings is opened in this new deal,  the tax savings is enhanced by ten years of the inflation effect devaluing the tax dollars they will pay with the next 24 years. The developer appears to get a nice tax dividend: they are spared paying the inflated tax payments brought about by inflation, by paying with dollars of lesser value.

Not only that but the rent on affordable units can go up according to inflation, perhaps turning a profit on the affordable by the time they open if the city allows.

Money

According to the financials, the city would receive $26,944,000 over the 24 years in taxes, the County, $16,416,000, and the school district $51,840,000 in taxes.

The Complete financials:

 

 

 

 

 

 

 

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WPCNR QUILL & EYESHADE. By John F. Bailey. August 5, 2008: The New York State Department of Taxation & Finance reports to WPCNR Wednesday that Westchester County is $3-1/2 Million off its pace for a $473.5 Million sales tax goal midway through the year. The Westchester County Clerk reports County Mortgage Taxes are down 33%, reflecting the 27% dip in housing sales in Westchester County the first six months of the year.

White Plains is Number Two in Sales Tax the first six months of 2008, despite Yonkers having a higher tax rate plus an additional 1%. The Final Quarter of April, May, June figure for White Plains of $11,485,331 was only $355,954 below the Oct-Nov-Dec. holiday period of 2007. Source, New York State Department of Taxation  and Finance. 

The county  has received $235.4 Million in the first six months of 2008 from the state – currently  a little less than 1% off expected sales tax collections of $473.5 Million, indicating a possible $3 Million shortfall in the county budgeted sales tax at this time.  Total shortfall  in sales tax and mortgage tax on the county level at this time, according to the State Department of Budget and Finance: $9 Million.

The Mortgage Tax Dwindles 33%

In light of State Budget Director Laura Anglin’s gloomy prognostications last week, the county may not collect what they expect in sales taxes, and with housing sales off 26.7% % in the first two quarters of this year, mortgage taxes may not make the $28 Million expected in the County budget.

According to housing statistics released by the Westchester-Putnam Multiple Listing Service two weeks ago, housing sales in Westchester County declined 26.7% in the first half of 2008 to 999 sales from 1,363 in the first half of 2007.  There are 4,616 homes on the market as of two weeks ago as opposed to 4,173 the same time last year.  Sales of Condominiums were off 15%; Coops, 23% down, and 2 to 4 family homes down the most, 31% off from a year ago.

County Clerk Troubled

County Clerk Timothy Idoni told WPCNR today the county mortgage tax collection the first six months of this year is down 33%. He said he projects the county to collect $23 Million for the year, and is hopeful for a pickup in sales. The county projected in their 2008 budget to collect $28.7 Million in Mortgage Taxes, indicating the county between the sales tax collection pace and the mortgage tax is running about $12 Million behind on the revenue side on a county budget of $1.778 Billion.

 

White Plains Robust Despite lower sales tax rate.

White Plains  received $22, 703,297 in sales tax receipts the first six months from the state through July 21  –  twice as much sales tax booty as Mt. Vernon and New Rochelle, and $9 Million less than Yonkers.

 Yonkers  received $31.7 Million in sales tax receipts, (thanks to Yonkers enjoying an extra 1% city sales tax – according to the Department of Taxation and Finance– that is not subject to preemption by the county.)

 

 New Rochelle received $13 Million in sales tax receipts back from the state the first six months of 2008 and Mount Vernon $9.1 Million. If you remove the Yonkers extra 1%, White Plains beats Yonkers head to head $22.7 Million to $19M, even with Yonkers collecting ¼ per cent more sales tax at its 8.375%  to White Plains 8.125%.  White Plains had requested to be put on a par with Yonkers sales tax, but this was rejected by city Democrats, who opted only for a ¼% increase in the city sales tax. Now in light of the present budget crisis any increase in White Plains sales tax may not be in the cards.

Soft Sales Tax Statewide.

Statewide, the New York State Department of Taxatation and Finance reports New York state counties received $3.285 Billion back from New York State the first six months of 2008, as opposed to $3.165 Billion the first six months of 2007, an increase in county sales taxes statewide of  4% which is the current 4.2% inflation rate statewide, according to last week’s report by the State Budget Director.

The Department of Taxation and Finance reports that in the first quarter of the state fiscal year the state collected $5.9 Billion in sales tax. The state kept $2.7 Billion and returned the balance to counties and municipalities.

The $2.7 Billion projects out to a state take for 2008-2009 of  $11 Billion in sales tax meaning that the projection for 08-09 after one quarter – according to the Department of the Budget is behind depending of course on how successful the holiday season turns out to be. The Department of Budget projects a sales tax collection for all of 08-09 of $14.6 Billion.

If the state sales tax numbers continue on the present soft pace without the expected kick from the holiday season, the state would collect $11 Billion, leaving a $3.6 Billion shortfall in sales tax revenue alone. But that is only if the holiday season does not supply its usual impact.

The Budget Director, Laura Anglin painted a grim picture last Wednesday  on revenues, which can be seen in their entirety on the Department of the Budget website: http://www.budget.state.ny.us/pubs/enacted/0809_q1_summary/0809FirstQuarterUpdateFinal.pdf

Since Albany legislators have indicated by public comments that they feel this is too soon to evaluate revenue trends and indicative of an early panic on the part of the Governor and Budget Director, it is instructive to examine what their news conference showed, which no other media has reported in depth. The slides below are provided by the state on the above website.

They indicate why Westchester County might expect that more than sales taxes and mortgage tax revenues will be effected in the last five months of the county fiscal year.

·          Falling corporate profits are expected to be off $510 Million this year. New York’s Top Sixteen Banks paid $173 Million in business taxes last year in the First Quarter. This year, they paid $5 Million a decline of 97%

 

 

·         In Sales/Use Taxes, the Budget Director predicted a $161 Million shortfall based on “weaker tax collections than estimated, an adjustment to motor vehicle fees (presumably lower auto  sales)”

 

 

·         Tax Base Growth expected to be 2.6% in 2008-09 is now expected to be 1.6% after First Quarter Figures are in. The Tax Base growth the last two years enabled the state “to solve its budget problems without making hard choices.”

 

 

 

·         Stall in Tax Base Growth has created a Spending Gap the next two fiscal years. Spending is on pace for an 11% growth in 2009-10, while Tax Base is projected to grow just 2%. In 2010-11, spending grows another 8.9% while revenue grows only 4.2%. This is not good.

 

 

·         The total deficit, the Budget Director anticipates is $26.2 Billion through 2011-2012.

 

 

·         13,700 mortgage loans entered the foreclosure process in the first quarter of 2008

 

 

·         As of a month ago 2.2% of mortgages (45,000 owners) were in foreclosure in New York, and increase of 25,000 homeowners in one year.

 

·         The Budget Director noted Wall Street troubles are going to cost the state major revenue for the following reasons

 

 

·         20% of state revenue comes from Wall Street, and the New York Securities Industry has reported 22.8 Billion in losses in the first half of 2008 – read “write-offs.”

 

·         Wall Street is in worse shape than it was in the months following the Trade Center Attack in 2001. In the three quarters following 9/11, the securities industry posted profits. In 2008, however in the first three months of 2008, Wall Street has lost $4 Billion, $16 Billion and $22 Billion.

 

 

·         Wall Street Bonuses will decline this year for the first time since 2002-2003. The last three years Wall Street Bonuse growth averaged 27.6%. The growth will not be there this year to help the state out. Anglin notes “the projected decline in 2009 Wall Street bonuses nearly doubled since (2008) Enacted Budget forecast.” The budget figured an 11.1% decline, instead bonuses appear to be a 20.5% decline

 

 

·         Capital Gains as a revenue steroid are expected to decline 24%. In the last five years capital gains grew 37% annually in 2003,04,05,06, and 07.

 

 

 

 

Westchester County  Executive Andrew Spano  was on vacation last week. The Westchester Department of Communications was asked for a statement on the effect of the state revenue predictions and whether or not county was going to attempt to rein in spending the last five months of the year.  Mr. Spano has not  issued any statement on Governor David A. Patterson’s  and Budget Director Anglin’s dire report on the state revenues last week and their ultimate effect on county spending, at this time.