Foxman: non-payment of taxes doesn’t mean Big Tupper project is troubled
The lead developer of the Adirondack Club and Resort has confirmed in an interview with NCPR that his investment team has fallen behind on its property taxes, owed to local governments, by tens of thousands of dollars.
Michael Foxman and his team were placed on an installment payment plan by local officials because of unpaid taxes dating back as far as 2007.
But the firm has since fallen behind on those scheduled payments.
According to the Adirondack Daily Enterprise, the Big Tupper resort’s backers currently owe Franklin County as well as the town of Tupper Lake just under $100,000.
“We are being forced to spend an absolute fortune going through the hearing responding to the actions and lobbying of the preservation groups,” Foxman argued. “We obviously will pay our taxes and interest with any penalties.”
The Pennsylvania attorney, who has been advocating for the project since 2004, argued that the current round of hearings would cost his investors between $350,000 and $500,000.
He acknowledged that that was a drain on his resources.
Asked if his organization had the resources to develop the large-scale resort — which includes more than seven hundred mansions and condos, as well as a marina and a ski area — Foxman said he remains confident.
“Between debt and equity and sales, we expect to have the financing available. If we didn’t, why would we be spending this money getting a permit?”
Foxman and his supporters have blamed the environmental community for delaying and extending the state’s review of the resort, which began in 2004.
But a review of the chronology of the regulatory process suggests that many of the delays were caused by Foxman’s group, which often waited months before responding to requests for additional information from the Adirondack Park Agency.
Foxman himself requested that the project go to formal mediation in October of 2007, a voluntary process which continued through June of 2009.
A year then passed after the end of mediation before his group submitted an updated development plan in June 2010.
“There were times when we didn’t care about delay,” Foxman conceded, “because we could see where the economy was. On the other hand…we always wanted the permit as quickly as possible.”
Asked whether the project had been delayed because of a lack of funds needed to pay for site plans and other needed materials, Foxman acknowledged that “we have been [financially] uncomfortable from time to time.”
“We’ve spent something on the order of $8 million [during the APA review process] and we expected to spend $2 to 3 million,” he said.
A vote on the project by the APA comission is expected some time this fall. Foxman’s team still has to secure permits from the Department of Health and the Department of Environmental Conservation.
Foxman said his investors have the financial backing to remain afloat through that process, and through any legal challenges that might follow the issuance of permits.
During hearings this week, one critic of the project, Tupper Lake resident Jack Delahanty demanded that Foxman’s group “be required to post performance bonds to assure fiscal responsibility in light of their repeated nonpayment on property taxes,” according to the Adirondack Daily Enterprise.
This news comes at a time when the Big Tupper resort appears to have strong momentum.
There was a huge outpouring of support at a hearing last week in Tupper Lake, and the Adirondack Park Agency staff issuing a draft report of potential permit conditions that appeared to lean toward approving the project.
Extended audio of NCPR’s conversation with Michael Foxman will be available tomorrow morning.
“
.jpg)
come on…the biggest project in the park’s history, and you didn’t plan on a protracted permit review process? He’s either stupid, or lying.
I agree, verplanck. Something doesn’t smell right in his explanation. And if you’ve spent $8 million thus far, what’s a hundred grand more to keep things progressing and avoiding more suspicion from the very people who’s support is crucial? It just doesn’t make any sense.
If Mr. Foxman’s business plan did not consider the extensive permitting process (and its costs) of the biggest project by far to ever go before the APA, then, well, it must not have been much of a business plan. It is convenient for Foxman to blame environmental groups – they have become the scapegoat of this project’s ability to move forward – but that is simply dodging the bigger economic issue. Whether there are environmental issues or not (and I’ll leave that for now to those that like to support or vilify those groups to continue their arguments) there are serious economic issues.
My fear is that the “huge outpouring of support” that this project is getting from citizens and some groups is being done somewhat with blinders on. There is great hope that this project will be the silver bullet that Tupper Lake has been seeking… and there could be significant benefits that can be seen by the greater Tupper Lake area with a significant development (although 700 housing units seems a bit extreme) like this but it is important to cover all the bases. While the environmental impacts are getting a lot of attention, I don’t feel the economic impacts are being scrutinized as closely as they should be. Delahanty has good reason to express his concerns, and as a resident (taxpayer) in Franklin county, I have concerns. I can’t help but think that this project, at some time or another, is going to cost the taxpayers… and Mr. Foxman’s unpaid taxes might be a hint of things to come.
I think this is a case, on the part of Tupper Lake residents, to be careful what you wish for. I continue to think, as I have from the beginning, that the financing for this product is questionable, and if approved, Tupper Lake taxpayers may be left holding the bag if Mr. Foxman’s rosy predictions do not come true. In any case, unless the original finance plan has been modified, taxpayers will be subsidizing the project.
By the way, it is might be instructive to remember the large Lake Placid Club project once proposed for Lake Placid failed to materialize because of financial problems.
The taxpayers are always left holding the bag when someone has a “big idea”. The tax people should put the squeeze on them right now while they’re still in town…before they flee back to wherever.
Michael Foxman: All hat, no cattle?
Wow, what joy you all seem to derive from someone who is trying to get a business off the ground, you insist he pay hundreds of thousands of dollars in taxes, then delay the project for 7 years (so far).
And what nonsense is this that you proclaim that the local taxpayers will be liable if the business fails? Where on Earth did you get that idea? There have been numerous business failures in Tupper Lake over the past 10 years, the only ones “holding the bag” are the ones who worked their butts off and invested their money and their lives, then lost it all because it is harder to make a go of one’s life in the Adirondacks than anywhere else in this state.
Only those who have never actually done anything constructive in their lives cannot grasp the dynamics of this tax situation.
Hang in there Mr. Foxman, we’re behind you no matter what the very vocal naysayers say!
I’ll ask again, has anyone read or been given a copy of the proposed PILOT agreement for this project? The residents of Tupper Lake and Franklin County should demand to see it as soon as possible. Given Mr. Foxman has tax problems already, and a PILOT agreement is by definition, a payment in lieu of taxes, it needs to be scrutinized by people other than the local elected officials, county planners, and economic developers.
Not a terribly persuasive interview. Sounds like he’s signaling a probable pull-out, one based on the bad 50s-style Ton-Da-Lay fantasy economics that have driven the thing all along, rather than on the given, known, un-secret existence of a regional land-use agency, which he’d like us to believe. If the whole thing depends on early sales to finance the rest of the plan then it’s a Ponzi scheme. If it can last for 2 years before things get back to “normal,” but not 5 or 6 years, as Foxman says, then he might as well throw in the towel now rather than putting TL and the rest of us through any more of this nonsense, because there ain’t gonna be any “normal” again, if by that you mean the recent bubble years of easy house flips and $2.50 gas. Tupper Lake needs to begin looking toward its existing village pattern and access to lake and wild land to attract investment, rather than getting all hot and bothered about every bigshot who comes along with the next magic cure. If the thing gets approved–which would be a mistake–TL needs to have the developers post a substantial completion bond, or expect two or three unfinished Mac-Great-Camps to be as big as this gigantic distraction ever gets.
Interested,
If you don’t understand how locals can be left holding the bag, I put forth the example of the Maple Ridge Wind Farm in Lewis county. Sure, a far different animal, but one which also was created with the help of a PILOT agreement. The taxing jurisdictions were forced to take the owner of the wind farm to court last year their annual PILOT payment.
When you have taxing jurisdictions who plan and pass their budgets based on expected PILOT payments, it creates all sorts of chaos when they aren’t payed. In some cases, those taxing jurisdictions then resort to passing that unpaid money onto the rest of the taxpayers. It can be a very big problem when you consider schools, local and county gov’t, etc…rely on these PILOT payments.
On top of that, I think the consensus here is that the economic side of this issue should get the same amount of scrutiny as the environmental side of the coin. It’s not necessarily an attitude of to hell with the project, but more of a let’s take this slow and cover all our bases attitude.
I’m going to have to start calling my comments, True Headline Re-Writes.
This one: “Tax Evasion No Trouble For Huge Resort”
“Non-payment of taxes” – that is downright funny.
Sure, let’s scrutinize the business plan of everyone who wants to open a business, the business expertise on the APA and among so called “environmental” groups should assure us that every business allowed to open will be a success….sheesh!
The taxes proposed in any pilot agreement certainly will be a higher amount than if no development at all is built, ask yourself what the value of taxes on the vacant undeveloped land will be if the resort is not built.
At least there is the expectation of more money for the municipality if there is a CHANCE that the property is developed.
As far as the resort is concerned, the plan is to develop and sell it in stages according to sales, not build it all at once, but then I guess the financial “experts” here knew that…
Interested,
You’re stating the obvious. Of course the goal is a larger tax base and many other economic benefits of development. All I’m saying is proceed with that development in a proper manner with due diligence. As far as I can tell, and perhaps I’m wrong on this, but there has been little discussion or opportunity to scrutinize the PILOT agreement. I’m certainly not suggesting it take 7 years to do this, but is a few months and some openness and review time by concerned parties too much to ask? A public meeting or two whereupon the authors and parties of the PILOT explain its specifics, address questions and concerns of the residents of Tupper Lake and Franklin county, etc. Since we’re ultimately talking about government agreeing to this PILOT, by definition is should be scrutinized to some extent by the taxpayers of the community.
Warren/Clapton. Unfortunately the proposed PILOT for the ACR does not guarantee any specific dollar amount will be paid to the local taxing entities, so suing the developer if they don’t get any money from the PILOT is not an option. In this proposed PILOT the bulk of the PILOT will be used to pay off the bonds issued to cover the infrastructure for the residential portion of the project. At that point if there is any money beyond the bond payment that amount will be split between the taxing entities. Interested: undeveloped land doesn’t require any municipal services. If you add roads, stormwater catch basins etc that the town has to maintain (extra sand, salt, possibly a new plow truck, fuel, additonal town employee, added insurance costs for truck and employee-you get the idea) then the municpality incurs expenses it wouldn’t on vacant land. If there isn’t enough extra tax $$ left over after the PILOT then the locals see their taxes rise to cover the extra expenses. That is a chance the locals should not have to take. If this is such a sure thing as Foxman has proclaimed for years, let him and his “investors” take all the risk with their own money. He has proclaimed they assessed value of the project will be around $600 Million, if thats the case why does he need a piddling $42 Million worth of HIS infrastructure costs paid for with our future town,county and school tax dollars? Sorry, big risk, supposedly big reward, let the developer take all the risk.
Jim,
Thanks for some clarification. Which leads me to another question. Since the proposed PILOT agreement will only cover the Bond payments, will Mr. Foxman continue to pay regular property taxes at full assessed value on the land until he sells it to the prospective buyers (whereupon they then pay the property taxes moving forward)?
7 years and 8 millions dollars isn’t enough risk? After following this blog for some time and the abundance of negative comments to any type of develpment, it seems to me that the north country gets what it deserves. NOTHING!!!
The terrible expense of a new truck, some sand and salt and the extra labor to plow a few miles of roads is nothing compared to trying to keep a community going when the population shrinks and business after business closes.
The idea that the naysayers have any concern toward the well being of the community is absurd. Tupper Lake has lost thousands of residents and dozens of businesses have gone under without so much as a simple expression of sorrow from the resort opponents.
I think you’re confusing negativity with due diligence. Since this is the largest proposed development in the Park’s history, and valued at approximately $600 Million, and includes a request for a tax payer backed PILOT, I think $8 million isn’t that big of a direct investment when you consider these factors.
And let’s not forget that the 7-8 year review/delay was caused, in part, by the developer. Personally, I think this is good economic development. But that doesn’t mean the economics of it shouldn’t be scrutinized just because I have that opinion. There’s great risk to the community, the tax payers, etc. to just shove this thing through.
Again,
Again, I don’t think most in this thread are suggesting this project should end, just advocating that we scrutinize the particulars on the money end of things. And does anyone know who pays the bond payments if it collapses? Is it specifically written in the PILOT what happens if this should occur? Are the taxpayers in default? The IDA? The town of Tupper? Who, exactly?
I sense an animosity, and a “gotcha'” mentality in many of these posts. due diligence doesn’t mean targeted malicious enjoyment in another’s problems. All the “why can’t we all get along” tunes we hear should extend to individuals or corporations who have invested heavily in their plans and dreams. That doesn’t mean they should have a free ride- but, if you are against development, be honest about it instead of couching your dissent in the language of bureaucratic carefulness. Enthusiasm and Energy are what the north country needs, and surely there are enough regulations to protect the locals from being left holding the bag.
Is the ski lift still open in Tupper? Honest question, I really don’t know. I went there years ago but not since it closed. Did it ever reopen?
Yes run by volunteers.
It is up to this development group to make this work or not and I think the government should not be putting up roadblocks. On the other hand I don’t think they should subsidize him either. I think a fully functioning ski resort in Tupper Lake is exciting!
However, personally I don’t think the economics are there to make this work; the national economy seems to be stuck and the housing market is horrible. But then again Mr. Foxman has been far more fiscally successful than I have in life so I would let those decisions be up to him, as long as he is risking his money and his investors money and not the taxpayers then it is his dice to roll. I hope it works.
I had heard about the volunteers but I thought they ran into some trouble as well. Or maybe it was their idea of opening it in the summer for bikes. Either way, I actually prefered Tupper to Titus and Whiteface is more expensive and a greater distance. I’m not sure if Mr. Foxman has visions of Aspen, but a smaller adirondack version would be nice. I also agree that taypayers shouldn’t be paying for it. 8 million dollars worth of review seems like overkill to me.
Clapton/Jesus 12:52pm If ACR flops and the bond goes into default the county IDA must foreclose and try to sell the carcas of the development to pay off the bondholders. if they can’t sell it for enough to cover the bonds then the county taxpayers may be seeing an increase in taxes.
These large scale development projects that require tax-payer subsidies are no different than the banks that are too big to fail or nuclear power plants that would be too expensive to build. In each case, all the profits are privatized by the CEOs and shareholders and all the risk is socialized by the government (tax payers). When things are go well for these enterprises huge private wealth is created for a few. However, when things blow up or meltdown (sometimes literally) the taxpayer absorbs the losses. Look at Wall Street and the banks where obscene profits were made during the good times but with the financial meltdown all the losses were conveniently assumed by the government. And the banks and corporations were bailed out by taxpayer dollars. The gains are privatized, losses are socialized.
The nuclear power industry is subsidized from beginning to end by the government. But all the profits go to corporate CEOs and shareholders. If there is a nuclear accident better check your homeowner’s policy – you don’t have any coverage. And the Price Anderson Act limits the amount of damages a utility would be liable to 12.6 billion while an NRC study says a major nuclear accident could cost 720 billion. Guess who covers the difference – that’s right, you and me – the taxpayer again. The gains are privatized, losses are socialized.
Is this the same Michael D. Foxman that started and was Chairman of Sunrise Savings and Loan, a Florida bank that had to be taken over so its losses could be assumed by the taxpayers? Is this the same Mr. Foxman that was indicted for improperly using Sunrise funds? The gains are privatized, losses are socialized.
http://articles.sun-sentinel.com/1994-10-11/business/9410100390_1_sunrise-savings-thrifts-bad-loans
How many times do we have to be fooled? Follow the money. If the gains are privatized and any losses socialized, it’s not a good deal for the rest of us.
myown, comparing any of this development stuff to a nuclear plant or a multibillion dollar bank, you gotta be kidding me?
If the Tupper Lake tax payers don’t like the deal than leave it on the table. Read the fine print. They can decide, do you think they are too stupid to know a bad deal when they see one?
What Tupper Lake needs is a mono-rail!
Paul, problem is the tupper Lake taxpayers don’t have a say in the deal, The FCIDA can shove it through if they think its a good plan with or without local approval or support. I hope they wouldn’t do that but the rules allow the IDA to do just that.
Paul, TLers are desperate – the town has been on a not-so-slow slide for years, not because it deserves it, but because certain types of jobs are leaving the Adirondacks for good. One of the few roads left is tourism, and rich people’s second homes sounds attractive, like a new Lake Placid.
The dedication of the Big Tupper volunteers is inspiring, but a small ski area like that is never going to make it these days, even if climate warming didn’t make every winter a crap shoot. What happens when the ticket price begins to match the going rate for other ski areas?
My gut feeling is that Foxman is playing the town for a bunch of yokels, as well as hoping to land a big fish investor to buy him out. Bottom line: if it sounds too good to be true, it is.
Brian, can you please find out more about this $8 million figure. We have heard lots of claims from the developer about how much money has been spent. But from what I can tell there has been planning work done, legal work and they purchased the marina (and options on the ski area and OWD land?). The marina is an asset. What, in God’s name did they spent $8 million on? The LA group must be one serious money-making operation. Lawson was quoted in the Enterprise as saying they were spending “at least” $25,000 per day at the hearings. These figures should not be printed without additional questions. If this process is truly that burdensome, then we should all be very concerned with how to streamline it. If it is not, the press should expose the bs and attempts at manipulation. If it is so burdensome, I would think they would willing provide an accounting to demonstrate what they have invested and what they have overcome to get to this stage.
Mono-rail, mono-rail, mono-rail…
The thumbs on these comments really show the bent of NCPR readers/listeners. Pro ACR thumbs down, anti thumbs up.
“One of the few roads left is tourism, and rich people’s second homes sounds attractive, like a new Lake Placid.”
Erb, interesting comment. Environmental groups, some of which oppose this project tell the folks in the Adirondacks and TL that tourism is the key to the Adirondack economy.
Consolidate development in and around hamlets like here in Tupper Lake is one of their prescribed strategies for the Adirondack economy.
Lake Placid is a good example of a place with a somewhat successful tourist economy.
The bottom line is some people just don’t want it even if is were to succeed.
Paul, you read too much into my statement – I was not being sarcastic. If I lived in TL (which I don’t, so I have not gotten involved in this issue) I would be interested in getting rich people to buy second homes in my community. It would provide jobs and give a tax base to the town. That, and the summer tourism, keeps Lake Placid going better than most of the surrounding towns.
But in my heart I do not think that Foxman is going to follow through with his plans – I don’t think he has the money or the customers. I truly believe that he is doing this to fool some investors into buying him out, making his millions while letting someone else figure out how to establish Tupper Lake as the next Lake Placid.
Regardless of what happens, I think the length and expense of the review process of this resort makes future Park development less likely. Maybe that’s the whole point. Or maybe the APA is understaffed. It does highlight the need, in my view, to make some changes in the way the APA works.
I agree scratchy. Is development good or not? We can’t have it both ways, if we want to discourage private industry in the one area that the Adirondacks have a comparative advantage over most of the Eastern US, fine. But we should realize the cost of that process, unemployment, decline and higher taxes.
I am not sure about this guy he does seem flaky to me, but what do I know? The point is he wants to spend a whole bunch of money in Tupper Lake, how is that bad? I mean are we turning away tons of other offers, we are doing so well that we only want the best development? I mean Tupper Lake looks more and more like Ogdensburg every time I go through there.
Scratchy, Mervel, I think it’s well established that the seven years that the review has taken is more Foxman’s doing as it is the APA’s. And Foxman himself has said that it’s a good thing it took so long– it got the project past the collapse of the housing bubble.
And “is development good or not?” is just a _bit_ of an oversimplification.
If the development gets half built and then goes belly up leaving the mountain with ugly scars and the town with debt that gets passed on to the taxpayers, then that’s bad. If the ACR’s plans go swimmingly, and all the houses get built using local building crews and contractors, and they all sell and downtown Tupper swells with handsome new businesses and high-paying new jobs, that’s good.
There’s a lot of room in between.
Those are good points. I think as long as the taxpayers are not on the hook for this project however the downside would just be the status quo? Or am I missing something?
That’s pretty much right. If the taxpayers aren’t on the hook, then the only additional downside is whatever environmental damage is done that doesn’t result in an occupied house.
I’ve seen some truly hideous unfinished housing developments in Florida– acres scraped clear for house building that never happened. Presumably this wouldn’t be quite as bad, thanks to APA restrictions on tree removal, but developers _do_ generally like to start by putting in the roads, so they can drive a prospective buyer up to their building lot. If the project fails, you’re left with those roads to the empty lots.
Mike.
Thanks for the clarification on the PILOT in regard to the bond pay off. It sounds like the IDA would be left holding the bag so to speak if the project ever defaults on the bond payments. As you suggested, that could leave the Franklin county tax payers accountable as well. However, if the IDA is a separate legal entity from the County/Town (as some IDA’s are structured), I assume the taxpayers wouldn’t be left holding the bag. If I were a resident of Franklin County/Tupper Lake, that’s the question I’d be asking. In other words, where does our liability end?
Everybody should Google Michael Foxman/Sunrise Savings & Loan. Typical developer. It’s always somebody else’s fault.