Car Dealer Abandons $10-Million Project After IDA-Neuhaus Spar Over Incentives

NEWBURGH—A car dealer that had planned to build a $10-million Cadillac dealership here has reportedly scrapped the project in reaction to criticism raised by Orange County Executive Steve Neuhaus and the Town of Newburgh over incentives granted to the project by the Orange County Industrial Development Agency.

The Orange County IDA reported on March 17 that Ron Barton, principal of Webb Properties which had been proposing the development of a $10-million Cadillac dealership in the Town of Newburgh, notified the agency that he will not pursue the project after all. The IDA on March 9th voted 4-1 to approve enhanced IDA incentives for Barton’s Webb Properties, despite the objections from the Town of Newburgh. The next day, Orange County Executive Steve Neuhaus issued a statement strongly criticizing the incentives granted the project and vowed not to sign off on the project.

IDA Executive Director James Petro in a telephone interview with Real Estate In-Depth said the incentives deal would be written in a way that did not require the County Executive’s approval. However, a few days later the IDA released its statement that Barton was abandoning the Cadillac dealership project.

The IDA stated in its March 17th announcement that Barton, owner of Barton Birks Chevrolet-Cadillac in Newburgh, stated in a March 11 letter to the IDA that based upon the opposition from the County Executive and Town of Newburgh to the enhanced IDA incentives, “we have decided that the better choice at this point is not to invest into new buildings in the Town of Newburgh.” Barton could not be reached for comment. Published reports stated that Barton was ordered by General Motors to separate the Cadillac dealership from its present Chevrolet-Cadillac operations at Auto Park Plaza in the Town of Newburgh.

Although the IDA voted 4-1 to approve the incentives, several members characterized the vote as difficult since the project involved retail use and the enhanced incentives did not receive the support from the Town of Newburgh. The incentives granted to Webb Properties included a partial abatement from real property taxes and sales and mortgage tax exemptions. The project was retail under the agency’s enabling legislation and thus required satisfaction of one of three conditions (tourism, highly distressed or unique facility) to secure incentives.

“Based upon information provided by the company, two public presentations made by representatives of Webb Properties, as well as staff meetings with the company on numerous occasions, the agency, under the guidance of legal counsel, concluded that the project satisfied both the ‘tourism’ and ‘unique facility’ exceptions,” the IDA explained. The nearly 50,000-square-foot dealership would have been the first Cadillac dealership in Orange County.

On March 10, County Executive Neuhaus issued a statement slamming the IDA’s incentive vote for the Cadillac dealership.

“Tax breaks need to be given out carefully. In my opinion, car dealerships locate where their customers are. That’s the nature of their business. To give a tax break to a car dealership sets a dangerous precedent in Orange County. More importantly, the local community has come out against these breaks. This is an issue of fundamental fairness to local elected officials and our taxpayers,” said Neuhaus.

He added, “PILOTs are a useful economic development tool, but they should be used sparingly. Using them for retail, particularly high-end retail, just doesn’t seem fair to me, and I cannot support it.” Neuhaus said he would not approve the ‘unique facility” finding.

Town of Newburgh Supervisor Gil Piaquadio who voiced his objections to the incentives prior to the March 9th IDA vote, stated, “Our town board objected unanimously, twice, to the IDA’s tax break because we believe a dealership, as a retail business, does not qualify for PILOTs. As Town Supervisor, I am very disappointed that the IDA’s members have taken this position. Newburgh stands to lose property tax revenues for our town as well as our schools as a result of this short-sighted tax break.”

The IDA countered the Town of Newburgh’s claim of tax losses, stating that Webb Properties promised to make the town whole via an impact fee or other arrangement.

In its March 17th statement, the IDA defended its vote in favor of the incentive package for the project, but did state, “The agency proceeded with the understanding that receipt of this confirming approval from County Executive Neuhaus would not be an issue given the size of the project, the capital investment, the incremental increase in tax base and, most importantly, the significant job creation (both construction and permanent), as well as job retention.”

The IDA continued, “The lack of County support for the incentives following the March 9th meeting came as a surprise to the agency and its staff. Clearly, the agency would not have rendered a unique facility finding if there had been any reason to think the County Executive would not support it.”

The $10-million project was estimated to create approximately 100 construction jobs and 12 permanent jobs upon completion.

John Jordan
Editor, Real Estate In-Depth