Syracuse shaking as much out of Destiny USA megamall as it can

Jul 25, 2012

Syracuse's threat of legal action against the Destiny USA mega-mall has prompted a matching threat from the mall's developer.

The dispute involves whether the developer owes the city a $2.2 million dollar payment because of delays in the of the construction of the mall.

In 2002, Destiny USA struck a deal with the Syracuse Industrial Development Agency (SIDA). The arrangement allows the mall developer to make 30 years worth of payments-in-lieu-of-taxes (PILOT).

That deal also called for three future expansions of the mall, and SIDA says the developer has reneged on the agreement.The fight looked like it could be headed for the courts after two actions SIDA took on Monday.

First, SIDA voted to flip the mall's overflow parking lots back onto the city tax rolls, and then it held the mall in default of the deal it struck with SIDA for an extension on its initial plan to build on those lots.

The parking lots were previously held by SIDA under the 30 year PILOT deal, but the developer exercised a loophole in its contract that allowed it to stop building after the first phase and still keep the tax deal.

Ever since then, the city has been looking for ways to get as much out of Destiny USA as it can, since legally it can't cancel the PILOT deal.

Paying up "under protest"

Syracuse granted Destiny USA an extension on its deadline to finish the mall expansions in return for a $4.4 million payment. A third installment of that payment for $1.1 million was due at the end of July.

SIDA Chairman Bill Ryan says his agency expected the mall developer wouldn't pay, and SIDA instructed its lawyers to file a lawsuit on August 1 if the payment check did not come in.

A lawyer for Destiny USA delivered the check Tuesday morning "under protest," as spokesman David Aitken described it.

Destiny USA issued this statement on the matter:

We actually offered to make this payment as part of discussions we attempted to have with SIDA in recent days on what they believed to be outstanding issues. Unfortunately, SIDA was not interested in discussing the matter, and for whatever reason unexplainably felt the need to act in a matter of hours. We believe SIDA’s interpretations of the controlling documents are flatly wrong and we have therefore made the payment under protest and considering our legal options.

"Quite frankly, I was surprised to receive that check," Ryan said yesterday.

With the check in hand, Ryan said there is no longer a need for SIDA to take the developer to court.

But that doesn't mean this issue won't end up there. Destiny USA is still looking into its legal options to get out of paying the rest of the money it owes SIDA for the extension, according to Aitken.

The fourth and final $1.1 million installment is due October 31.

Parking lots

By transferring the overflow parking lots at Destiny USA back into the hands of the mall and thus on to the tax rolls, Syracuse will see a larger revenue from them for a longer period of time.

SIDA was collecting money off the lots, $53.90 per space to be exact, according to Ryan, but those payments were set to end in 2014.

With the lots back on the property tax rolls, the city and county will bring in almost $700,000, compared to about $400,000 under the PILOT.