The Editorial The Bradford Era Wouldn’t Publish: Danielle Brinsky on the OECD

opinion1Recently I posted to the Citizens for Paul Berg for Mayor page asking about his views regarding the OECD’s commercial property rental business. Mr. Berg has contacted me and has offered an opportunity to discuss these issues with him

Mr. Riel contacted me, also, with a quick acknowledgement that he read my post. At the urging of some community members I contacted the Era today to see if I could insert a paid editorial knowing my piece exceeded the free Letter to the Editor word count. Era staff kindly and promptly replied that they could not run it as an editorial, but suggested an advertisement instead.

I have inquired about the advertisement with another Era staff member and am looking forward to their response. That being said, I am posting here the piece I submitted. It has been edited slightly, more professionally, and it now includes another important point I had wished to make: the 2012 reassessment of our Chestnut Street property. Dan is openly endorsing Mr. Berg. He has given him permission to put signs on our city properties. As I stated in an earlier post today I do not believe in the government system. But Dan bought me a pair of sandals (he may or may not know about them yet) in exchange for my agreement to hang signs.

I appreciate that Mr. Berg has taken the time to speak with us. The issues detailed below are very real and should at least be considered. The edited piece is as follows:

As a commercial property owner in the city of Bradford, I have questions and concerns about the mayoral candidates’ views on city-owned rental properties. I understand that many citizens of the city see improvements in sidewalks and street lamps, and these are important. But they may be unaware of the incredible constraint the OECD places on commercial development within the city as detailed below.

Please know that any quotes contained within have been obtained from either video tape of the April 28, 2015 City Council meeting provided on various sites to the public, the OECD’s own website, federal tax returns provided to the public or information available via the IRS website.

I have compiled facts using information available to the public and my own personal knowledge and experiences. I affirm that the information below is to the best of my knowledge.

To begin, current real estate tax rates are as follows: City of Bradford – .01602; Bradford Area School District – .02152; and McKean County – .00925.

Additionally, as described in detail on the OECD’s website, we know that the OECD currently owns 231,696 square feet of commercial real estate property. They are as follows: 300-500 Chestnut Street, 40,000 sq. ft.; 195-245 Chestnut Street, 35,000 sq. ft.; 20 Russell Boulevard, 90,000 sq. ft.; Holley Avenue industrial facility, 55,000 sq. ft.; and City Hall, 11,696 sq. ft.
During the April 28 City Council meeting, OECD Executive Director Sara Andrews stated that her Office paid a total of $107,096.10 in real estate taxes to the three taxing entities. She specifically noted that $36,236.23 of that amount was paid to the City of Bradford, leaving $70,859.87 for the other two taxing entities.

As both candidates know my husband and I own two commercial properties within the City of Bradford, very comparable to those owned by the OECD. In 2012 we made an appeal to the County Assessment Office asking for a reassessment on one of our properties. This request was based upon the lower rents for buildings similar to ours owned by the OECD that we are forced to compete with. The County awarded us a reassessment resulting in a lower current assessment of $35 per square foot. Our other building is currently assessed at approximately $28 per square foot.

Assuming the OECD properties have comparable assessed values using the same market indicators, building specifications, etc. as every other commercial property in this town, we may be able to use a fair, average assessed value of $30 per square foot resulting in a cumulative $6,950,880 assessed value. Using the same formula the taxing entities use to calculate real estate taxes, had the OECD properties been privately owned, the annual taxes owed for these cumulative properties would have been: City of Bradford: $111,353.09; Bradford Area School District: $149,582.93; and McKean County: $64,295.64.

As a reminder, only $36,236.23 was paid to the City of Bradford and another $70,859.87 divided amongst the other two entities. Even if an argument is made that $30 per square foot is high, using the above figures the City of Bradford, Bradford Area School District and McKean County are still being severely shorted in tax revenue, to the tune of approximately $200,000 per year altogether.

Please, also, remember that Ms. Andrews’ original figure of more than $107,000 was presumably for both commercial and residential properties owned within the city. This consideration only increases the amount of tax revenue the city is losing with OECD owned properties. The $36,236.23 amount Ms. Andrews referred to is minimal in comparison to what the properties could possibly generate, and is actually comparable to what many of us already pay on disproportionately smaller amounts of property.

In all, and using the figures above, the minimal real estate tax responsibility alone gives the city and the OECD an approximate $.90-1.00 per square foot advantage on lease rates over all other commercial property owners in the city.
The statement has been made that the OECD is a “self-sustaining” entity. It does not accept monies from the city. It does, however, accept monies from the State of Pennsylvania and the federal government in the form of grants, a.k.a. tax dollars paid to the State/Fed and disbursed to entities like the OECD. Therefore, the argument can legitimately be made that private property owners’ tax dollars are being used to fund OECD construction and rental activities. In other words, property owners’ own money is being used to compete against them in the real estate business.

As recently as March 2015 certified appraisals were performed on both properties we own. When the appraiser attempted to find comparable properties within the city he noted that they exist, but as he stated in writing, were “leased through government programs providing significant incentives. These were not deemed reflective of the local market.” It is a fact that the OECD is renting commercial space in multiple locations for under $4 per square foot. No doubt, the $1.00 per square foot advantage in real estate taxes helps lower their rates below those of other private property owners’.

Additionally, the OECD is unable to properly maintain their facilities, unlike market-driven private property owners who must meet customers’ expectations of quality. The OECD employs their own maintenance staff that is constrained by time and money rendering them unable to make necessary major repairs to buildings, including a roof at Russell Boulevard. There is no doubt that maintenance costs (or a lack thereof) are included in lease rates. Please keep in mind, the above-mentioned reference to below-market values does reduce – rather than increase – commercial property values in the city, just the same as it would for residential properties. The final result is a stagnant and/or dwindling local economy.

Speaking of Russell Boulevard, on the OECD’s website this facility is referred to as an “incubator” facility. Ms. Andrews repeated this fact at the April 28 City Council meeting. Typically, an incubator would be temporarily used to help facilitate new business start-ups with lower costs and OECD-provided low-interest funding in preparation for said businesses’ future success. Currently there are two companies still operating at the Russell Boulevard location with annual multi-million dollar revenues.

The argument that one of those companies has less than five employees at their Bradford location is inconsequential; the corporation’s revenues are the same regardless of where they place their employees. They have also been a tenant at this location for more than ten years. Do the candidates feel that this situation is reflective of the intent of an incubator building or program? Do the candidates believe it is in the best interests of the city’s economy to use OECD-owned buildings to provide opportunities to long-term, successful businesses to increase their profit margins by staying in lower-than-market rental spaces? Or, in contrast, is it in the city’s best interest to financially sponsor businesses for extended periods that would otherwise fail in the actual market and are thereby taking up valuable yet low-cost space, prohibiting the development of new businesses that can be successful in three to five years?

Mr. Berg has stated that he has sent Right to Know requests to the OECD. I would like to know if he’s requested the following information that I believe is important:

1. Professionally audited financials, specifically Balance Sheets and Profit and Loss reports showing assets, liabilities including loans, rental incomes, grant monies and expenses. These reports would show the profitability, or at least the sustainability, of the OECD.

2. The amount of time and equivalent wages spent on administrative assistance to the Bradford Economic Development Corporation (“BEDC”). This is a 501(c)(6) corporation with federal Form 990 filings available to the public. The BEDC is essentially a business league and/or real estate board comprised of local business leaders, including Sara Andrews, that promotes “local economic and business development” via the construction of the Lafferty Hollow Industrial Park.

Please keep in mind that this corporation depends solely on grants and rents to maintain sustainability and much of its multi-tenant facility is not occupied, while other parcels remain undeveloped, partially developed and/or unsold. Therefore, significant losses were realized in 2013 (an approximate $711,000 loss which included a tremendous loss on a building disposal) and 2011 (an approximate $379,000 loss).

The result was a net loss of $823,168 over a three year period. Recognizing that the basis for OECD funding is taxpayer money, should the OECD be providing support? Isn’t it in everyone’s interests to know how much time and money is being spent on what is effectively a private, though “community oriented” tax-exempt corporation? Especially considering that the organization appears to be astoundingly unsustainable and unable to pay for its own administrative support? I, personally, feel that any amount above $0.00 or zero hours is too much. Any private developer/business owner could never financially survive this project.

3. Property and liability insurance for the Chestnut Street properties or building elevations, as one may be in a FEMA Flood Zone, and would require additional flood insurance (resulting in additional costs to the OECD passed on to tenants).
Also, what would each candidate do to encourage the OECD to work with private property owners?

I am personally aware that in the past eleven years of ownership of one building we were not approached once by the OECD to inquire about any space availability (we had space available and advertised on a 30’ banner). Nor was an effort made to partner with us to “provide space to local companies to meet their expansion needs or attract new companies to the area,” as the OECD states part of its mission to be.

Wouldn’t it be helpful if the OECD put forth less effort trying to compete with private owners who spend time and resources improving and generating economic wealth in this town and instead tried to court newcomers to fill already vacant spaces?

In conclusion, where do the candidates stand on private economic development in a town where so little incentive to invest exists? Many properties are now barren, their owners unable to compete with their own undercutting City government.

Think of the office professionals that left Main Street and relocated to City Hall, or retailers that left private buildings to occupy OECD space. Could you blame these businesses for leaving private properties and relocating to government properties with taxpayer-enabled lower rent? Absolutely not! Is it unethical that our own city government provides a vehicle for this to happen with our own money? Definitely. The opportunity to make any type of commercial progress in this town has all but vanished at this point. Do the people, especially the local individuals who actually build, invest in and support commercial real estate in this city have either candidate’s support?

As a property owner in the city I do feel that the above-listed issues and information should be considered by those that have the opportunity to vote and would like to see real economic progress in the city of Bradford.

Danielle Brinsky **For the record: when I wrote this I remotely pulled my 2014 tax info from my server, therefore, the city tax rate is wrong in my post. The current rate is .01752; my error, as I had not yet uploaded my 2015 documents so they weren’t readily available to me away from my desk. Certainly a mistake on my part; I should have been more thorough. I apologize for any confusion.

https://www.facebook.com/danielle.brinsky/posts/10205584930758528?fref=nf

Posted by on Jun 2 2015. Filed under Local News, Opinion/Editorials/Op-Eds. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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