Downtown-based Zamagias Properties planned the $42.8 million Washington Park project for the corner of Washington and Bower Hill roads and Mt. Lebanon municipal and school district officials agreed in 2007 to a tax increment financing plan, or TIF, that allowed Zamagias to borrow money to buy the land and plan for construction. Part of the money from property taxes on the condos would go into a fund to repay the loans.
When the suggested condo prices of $300,000 to $1.1 million prevented enough sales to begin construction during the recession, Zamagias withdrew the project in 2010. That meant no tax money going into the company’s debt service fund to repay the $1.79 million it owes by next year.
Neither the municipality nor the school district lost any money on the project, Feller said. Both collect taxes on the value of the unimproved land; only tax money from any buildings would go into the debt service fund.
Thursday, September 13, 2012
This is disgusting!
Remember how Zamagias planned to build $42.8 million worth of luxury condos on the corner of Washington Road and Bower Hill Road and Mt. Lebanon agreed to a TIF in 2007? Well, it "ain't gonna happen."
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Let's just forget for a few minutes about the thousands of dollars both the School District and Municipality spent on this fiasco and the thousands of dollars of lost opportunity for bungling this parcel for almost 2 decades (between two failed projects and other activities) and stay focused for a minute on the millions that may be defaulted.
The Mt. Lebanon Commission has an opportunity to avoid the default.
If the developer does not "make good" on their TIF loan -- at this point the Municipality still has the right to buy back the original parcel of land and move forward with another developer. Sorry if the Zamigias folks lose their shirt on the deal -- but far better them than the Pennsylvania taxpayer, who I think holds the paper -- oh yeah --- that's us.
More later......
"We warned and told you so !" will be the legitimate reaction from the critics of this fiasco from the get-go.
And who covers the cost of the Commonwealth paying off the TIF loan because there is no equity money in the project to take ? PA taxpayers of course, unless the Commonwealth has the right to seize the real property and sell the overall property assemblage to the highest bidder. This would seemingly trump Lebo's right to buy back the former Parking Authority's portion of Zamagias's now overall property holding and possibly threaten some of Lebo's control of what a developer might want to do with PMXD zoning rights.
Zamagias has recently acquired adjoining property on Oak Way giving them the entire block-long frontage from Bower Hill Rd. to Oak Way. They have not revealed a revised development plan to the public, if one even exists.
Stay tuned to yet another TIF scheme gone wrong.
Mt. Lebanon has established a sucker reputation:
“Somebody sold (Mt. Lebanon) a bill of goods and they got burned,” Dietrick said.
One has to really wonder whether there will be any "lessons learned" from this debacle on the part of (1) the municipality (who led and were the driving cheerleaders behind this debacle), (2) the school district who readily agreed to join the parade, and (3)the county redevelopment authority who facilitated the TIF arrangements with full blinders on while (4) the county itself, to its credit, refused to participate with tax dollars.
The previous approved developer of this gateway to Lebo had also been granted TIF approvals, and struck out in the batters box after 8, yes 8, years of allowance at bat by the local taxing bodies.
Today's "Laurels & Lances" section on the Tribune-Review editorial page awards a "Lance" to Lebo for this Zamagias boondoggle !
The PA TIF Act is full of loopholes that allow, even encourage misuse & abuse of "the system" by developers, taxing bodies, financing authorities and politicians.
The PA legal criteria for blight determination, a fundemental requirement for TIF approval, remain an absolute farce - it has been stated in Lebo public meetings that application of the exceedingly loose, ill defined and ambiguous blight criteria could easily declare every single real property in Lebo to be blighted !
To illustrate how corrupt our political system is, do you know that there is a PA law requiring an annual report on the status and effectiveness of all Commonwealth TIF projects ? Undoubtedly to "prove" open & transparent government.
But, are you also aware that there is no reqirement in law that such information has to be divulged by developers, county and local government agencies and taxing bodies ?
And are you further aware that some sleezebag legislator snuck an amendment into some other unrelated legislation that prohibits the release of such information ?
Can anyone even just make a guess as to who might have been behind all this ? And get away with it ?
Well, don't leave us in suspense. Which sleazebag was it? You'll have to narrow it down from the hundreds who inhabit Harrisburg like hinkey, hollow hobbits.
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