A deal is so great, it’s literally a steal!
Robert Congel took advantage of several tax break programs to turn his already-subsidized Carousel Center Mall into an international destination, dubbed DestiNY USA. Construction ended in 2012, with only one of three proposed phases of the project complete. By exploiting loopholes in subsidy programs, Congel was able to shift his costs onto the public and keep all his tax breaks without keeping his promises. DestiNY USA, which benefits from over $759,000,000 in public dollars, currently employs 38 full- and 20 part-time workers at an average wage of $8.76 an hour. As of 2010, Congel reported a total of 3,314 jobs, including mall tenants. This is actually a decrease of 64 jobs from the mall’s 2006 pre-expansion high of 3,434 jobs. Since first receiving the Carousel Mall’s subsidy in 1990, Congel has not increased his job creation estimates, and it remains to be seen how many new jobs the mall expansion will actually create.
With tax breaks on the Carousel Mall in Syracuse about to expire in 2006, Congel applied for Empire Zone tax credits and pitched a redevelopment project that consisted of a luxury mall expansion, hotel and conference center, entertainment complex with an aquarium, stadium, performing arts center and three golf courses, and a research and development facility. Retail projects were not allowed to be financed by IDAs at the time, but Congel found a loophole by dubbing his project a “tourist destination,” and was approved for tax exempt bonds and $724 million in tax exemptions from the Syracuse IDA in 2007. Instead of making PILOT payments to the local government and school district to offset the mall being taken off the tax rolls, he crafted a unique deal where his PILOT payments go to pay off his own debt. He then claimed this payment as part of his investment, cashing in on $70 million more in Empire Zone tax credits, while robbing the community of all property tax revenue from this huge mall development.
If this “creative math” weren’t bad enough, Congel sued to be accepted into the Brownfield Cleanup Program, then claimed over $50 million in tax credits for a cleanup that likely only cost him $1 million. He also found a loophole in the federal green bond program. Congel did not include the energy efficiency, renewable energy and sustainable design features he originally promised, but when audited by the IRS, his lawyer successfully argued that the program only required Congel to describe –not actually include—all of the green features.
This wealthy developer has broken promises and exploited nearly every conceivable subsidy program in the city, state and country simply to expand a mall, resulting in the creation of some more poverty-wage jobs. Huge loopholes in these subsidy programs allowed Congel to cash in while minimizing the community benefits that should derive from public investments. And whatever happened to the hotel, entertainment and other parts of the project that the public financing decisions were based on? It turns out that a small clause in Congel’s agreement with the Syracuse IDA allowed the project to be complete whenever Congel says it is, meaning the public will be paying a huge price for a somewhat bigger mall until 2035.
Robert Congel is the founder and managing partner in Pyramid Companies, the largest privately-owned developer of shopping centers in the Northeast. Congel has been among Forbes Magazine’s list of top 400 richest people in the United States. In 2003, he had a net worth of $700 million. Pyramid Companies is based in Syracuse, NY, and its portfolio of 13 shopping centers in NY and four in Massachusetts generates approximately $4 billion in annual sales. All of the shopping centers are maintained and operated by Pyramid Management Group, LLC. Robert’s sons, Scott and Mark Congel, have also gone into the development game and have sought lucrative tax breaks. Scott is currently requesting $250 million in tax exemptions from the Monroe County IDA for the $700 million expansion of the Medley Centre / Irondequoit Mall. There are some legal issues the Congel family has failed to master. They have settled several lawsuits, the largest of which was a racketeering charge in 2006 from their business partners claiming that the family illegally siphoned profits from their malls.
Why does the state reimburse Destiny USA for property taxes if it doesn't pay property taxes? July 02, 2012, by Rick Moriarty for the Syracuse Post-Standard, at http://www.syracuse.com/news/index.ssf/2012/07/how_does_destiny_usa_get_reimb.html
See also Industrial Development Agencies: Summary of Data, Office of the New York State Comptroller, at http://www.osc.state.ny.us/localgov/datanstat/findata/index_choice.htm
Ibid Industrial Development Agencies: Summary of Data
“Carousel Center Expansion,” New York Construction News, June 1, 2008: Volume 55; Issue 12
Industrial Development Agencies’ Project Approval, Evaluation and Monitoring Efforts, Office of the New York State Comptroller, 2006, p.11
IRS says Destiny USA green bonds can stay tax-exempt, March 16, 2012, by Rick Moriarty for the Syracuse Post-Standard, at http://www.syracuse.com/news/index.ssf/2012/03/irs_says_destiny_usa_green_bon.html
Tax-free from the start: Destiny dictated the deal, June 10, 2012, by Rick Moriarty and Tim Knauss for the Syracuse Post-Standard, at http://www.syracuse.com/news/index.ssf/2012/06/destiny_dictated_deal.html
Forbes 400 Richest in America 2003, at http://www.forbes.com/finance/lists/54/2003/LIR.jhtml?passListId=54&passYear=2003&passListType=Person&uniqueId=0T4N&datatype=Person
Pyramid Companies, About, at http://www.pyramidmg.com/index.php?page=history
Lessons from Destiny for Medley, June 6, 2012, by Rachael Barnhart for ABC Channel 13 news, at http://www.13wham.com/news/local/story/destiny-usa-done-but-will-it-impact-medley/o0RZwxDabkOuMJcp3s8Slg.cspx
David Andreatta, Little Scrutiny of Builder’s Plans for Medley Centre, Democrat and Chronicle, Oct. 18, 2009.