4:29pm

Tue April 2, 2013
Business

Destiny USA and Syracuse reach deal to avoid legal battles

For the first time in Bill Ryan's 10 years of public service, Syracuse and the owner of the Destiny USA mega-sized shopping mall are not facing legal action. Ryan is a former common councilor and now chief of staff for the mayor and chairman of Syracuse Industrial Development Agency (SIDA), the city's development arm.

SIDA and the developer behind Destiny USA, Robert Congel's Pyramid Companies, reached a settlement Monday to avoid up to three lawsuits.

"I think it leaves [Syracuse and Destiny USA's relationship] in a place where it’s never been before," Ryan said, "and that is with little or no litigation and little or no threat of litigation."

The dueling legal threats reached a head late last year when there was talk of up to three different lawsuits from the two sides. The current round of legal posturing stems from an announcement last summer by Congel that the mall would not expand as much as once promised.

But through a loophole in its payment-in-lieu-of-taxes contract, it was able to keep its 30-year tax break. That prompted the city, and SIDA, to begin trying to shake as much out of the mall as possible.

First SIDA declared Pyramid to be in default of its agreement and demanded - under threat of legal action - that the mall make a series of $1.1 million dollar payments to the agency for contract extensions. The developer made those payments, but "under protest." Pyramid threatened to sue to get the money back.

At the same time, SIDA voted to flip ownership of Destiny USA's auxiliary parking lots back to the mall (SIDA owned them under the tax break deal). The lots sit on the land Congel once promised to to use to expand the mall. The transfer would allow Syracuse to begin collecting property taxes on the land. That prompted yet another threat of legal action from the mall's owner.

The third legal threat was related to Hiawatha Boulevard, a major thoroughfare that runs past the mall. The street cuts off the current mall from those auxiliary parking lots. As part of the original deal with the city, Destiny would have been able to close off a part of the street as it expanded onto those lots. The Common Council voted to revoke that right last year.

The settlement puts all those legal threats to rest. Ryan says that while the deal isn't perfect, at least the legal threats are over.

"When you make a settlement, you settle some things," he said.

Here's how the settlement shakes out:

  • SIDA will return the $2.2 million in payments to Pyramid by not picking up a $200,000 annual payment from the developer for waterfront redevelopment, part of the tax deal. It will forgo that payment for about 10 years, until it totals $2.2 million.
  • Pyramid agreed to assume ownership of the parking lots, which are assessed at $12.8 million. They will now be taxable at a rate of $499,200 a year. That's an increase of $92,000 over what SIDA was getting for the land from the earlier tax deal.
  • Syracuse will regain control of Hiawatha Boulevard, as the council ordered, and Pyramid will not be able to close the street down.

David Aitken, a spokesman for Pyramid Companies, issued the following statement:

We appreciate the collaborative effort that has resulted in the Agreement with the City and SIDA to resolve these open issues. We are looking forward to continuing our efforts to develop this site as the premiere shopping, dining, and entertainment destination in the United States, and also look forward to the benefits this development will continue to bring to the City, the County and the region.

The loss of the $2.2 million and any other concessions is worth avoiding going to court with Destiny USA, Ryan said; something Syracuse has done before and not faired well in.

Ryan says he'll now be able to move on from the ordeal and put his attention elsewhere.

"I can focus my time on other issues and other problems that face the city," he said.