New details emerge in settlement between Destiny and Citigroup
Mon, 23 May 2011 02:28:27 GMT —
11am Monday Update:
The Chairman of the Syracuse Industrial Development Agency says the clock is ticking for Destiny to complete its expansion of the Carousel Center, but refuses to say what would happen to Destiny's tax exemption if the deadline passes.
Bill Ryan, who is also Director of Administration for Mayor Stephanie Miner, says when Destiny and Citigroup reached an agreement on a dispute that had stopped construction of a 1.3 million square foot addition to Carousel, Destiny had 87 days to complete the project. Ryan says that means the Pyramid Companies, which is developing Destiny, has until June 6th, to complete the addition and begin a second phase of Destiny. That second phase could be either another mall expansion, or the construction of a hotel. The completion and second phase, is tied to a tax exemption on the expanded portion of the Carousel Center, Ryan refused to speculate what would happen to that expansion if Destiny's developers fail to meet the June 6th deadline. "This is still in Pyramid's hands" Ryan told CNY Central's Jim Kenyon Monday.
Presumably the City of Syracuse would have the option of assessing and taxing the expanded portion of the mall. Destiny also secured a tax exemption for the existing mall, but Ryan says that exemption will remain in place and is not affected by the deadline. Syracuse City Councilor Jean Kessner says she would have to study the settlement, but "generally speaking" is unwilling to grant tax exemptions for large projects. She points out that "people pay taxes, that's the way we pay our bills", but 54 percent of the properties in Syracuse are tax exempt.
Councilor Kathleen Joy who was a frequent critic the tax deals for Destiny feels "we need the mall to be a viable project. When we structured the deal, we were anticipating $17 million in sales tax from the expanded part alone, obviously we've seen nothing." Joy said.
Destiny spokesman David Aitken is withholding comment. Never the less, Destiny released documents pertaining to the settlement reached with Citigroup last March. SIDA also released the terms of the settlement. The settlement means Citigroup will provide no more money for the expansion beyond the $86-million already released The bank had originally agreed to lend $155-million for the project. The settlement also provide $42-million dollars to pay contractors who were owed money when construction stopped. It also protects developers Robert Congel and Bruce Kenan from personal liability for repayment of the loan.
A source also says the settlement is a "sweet deal" for Destiny. The source points out if the Pyramid Companies can pay off a 310-million loan to Citigroup within 3 years, Citigroup is willing to "forgive" $190-million in money that it would otherwise be owed.
Construction on the Carousel expansion resumed on April 25th. When completed, Carousel would be among the largest shopping malls in the nation.
New details are being released about the settlement between Destiny and Citigroup in regards to expansion at Carousel Center.
The agreement was reached back in December. Construction had been stalled for nearly two years and resumed last month.
As part of the deal, Destiny will pay the contractors that were owed money. Destiny will also get a five-year extension to pay back the mortgage.
Citigroup, which already invested $86-million into the project, will not invest anymore money.
Right now, work is being done on the 850-thousand square foot expansion.