Syracuse, NY hopes Destiny mall ends bond dispute
March 14, 2006
NEW YORK, March 14 (Reuters) - Syracuse, New York, hopes the Destiny Mall
developer will avoid more court battles over hundreds of millions of dollars
of tax-exempt debt by detailing how it wants to expand a local mall and
commit to deadlines, a city official said on Tuesday.
Last Thursday, State Supreme Court Justice John Centra ruled against
Syracuse and for the developer, Pyramid Co., who says the city needs the
800-acre waterfront project to halt its long-term decline.
Pyramid in court had fought Syracuse's determination that the existing
mall should start paying local property taxes.
Syracuse had argued that the existing mall's 15-year agreement to make
payments in lieu of taxes had expired on Dec. 31, 2005, said Stephanie
Miner, who chairs the City Council's finance committee.
Localities often lure developers by offering them payments in lieu of
taxes. These payments are lower than the property taxes that otherwise would
be due though they can rise later.
Spokesmen for Syracuse and Pyramid were not immediately available to
Miner was not hopeful that Pyramid, which calls the project Destiny USA,
will settle its differences out-of-court.
"This has been presented to them before and they have always turned their
noses up," Miner said.
Saying the developers had produced "radically different concepts" for the
project, she added: "Short of them actually committing to what Destiny is
... an appeal would be the next step," she said.
Syracuse has ample ground to appeal the lower court ruling, said Miner, a
lawyer with Blitman & King.
Pyramid's plan to use tax-exempt bonds sold by the Syracuse Industrial
Development Agency for private purposes -- expanding the mall -- violates
the state's constitution, she said.
Such debt can only be used for public purposes, such as building the new
roads a bigger mall would need, she said.
Miner said Destiny initially was seeking $281 million of tax-exempt debt
from the city agency.
Last March, Destiny said it hoped the Syracuse agency in 2005 would sell
as much as $3.6 billion for the expansion.
But Miner said the developer also breached its accord with the city when
it substituted a $155 million loan from Citigroup for a $340 million loan
from Deutsche Bank. This gives Syracuse additional grounds for an appeal,
Destiny also hopes to get some $900 million of tax-exempt "green" bonds.
This is a new federal category of debt that the project could qualify for
because it will only use sun, wind and geothermal sources for power.
© Reuters 2006.