The City of Peekskill has been authorized to issue up to $20 million in bonds to finance the cost of the Momentum grant projects, which have the stated goal of funding essential infrastructure for housing.
On Tuesday, May 27, the Common Council voted by majority to authorize the issuance of those bonds. Councilman Ramon Fernandez voted against the resolution.
Fernandez told the Peekskill Herald he was not convinced it was a good idea due to the city’s challenged financial situation and referenced the Department of Public Work’s (DPW) challenge in increasing the budget compared to the police and fire departments.
“How do you expect in the next three, four years we’re going to increase the budget for the DPW if we’re going to increase the [debt] payment for more than half a million dollars per year?” Fernandez asked. “…It is too much.”
On April 28, the council officially accepted the $10 million Mid-Hudson Momentum Award from New York State Empire State Development which requires an equal match of $10 million from the city and will not reimburse outlays until the projects are complete.
On Monday, May 19, Comptroller Toni Tracy described to the council the borrowing and debt projections related to the $20 million bond resolution.
The city is projecting it will initially borrow $4 million via short term bond anticipation note to start work on the James St. and Nelson Ave. garages. In 2026 the city anticipates borrowing another $13.5 million for Momentum grant projects, bringing the total grant-related debt to $17.5 million. It projects reducing this debt to $15 million in 2027 and $3 million in 2028. The $3 million would be financed via a 20 year bond.
Councilman Dwight Douglas said on May 19 he believed it was unlikely that they would want to issue the bond anticipation note of $13.5 million in 2026, saying it made more sense for it to come in chunks past that point.
“It sounds nuts to me is all I would say,” Douglas said. “The $4 million I’ve got set with me because I think we’ve gotta fix the garages.”
City Manager Matthew Alexander said then the idea was to spend and finish within a tighter time period so the city doesn’t carry millions in debt on a short term repayment basis. He added that they are trying to squeeze the timeline of the project down to coordinate different projects together so the city doesn’t end up with annual $1 million debt payments in the future.
Director of Planning Carol Samol told the Herald the city would only borrow what it needs to complete each project and will only draw on bond funds when projects are ready to commence.
“The projects are well planned for, including cost estimates, construction timelines, and preliminary design,” Samol said. “The state granted the Momentum Award to Peekskill based on the merits of the proposed projects and our history in delivering housing and infrastructure… As with any grant project, the city would work closely with the grant maker if changes are required during implementation.”
The grant requires the city to start infrastructure projects within two years, which can include design. To be reimbursed by the state, the city must complete the infrastructure projects and have at least a quarter of 1000 units of housing ready for occupancy. Developers must complete construction on at least half of the affordable units by 2028.
By that time, Samol said the city anticipates associated revenues from those private developments to help offset Momentum project costs. Those revenues include infrastructure and parking fees, tax payments, and payment in lieu fee for parking waivers within a defined downtown area for sites that cannot provide on-site parking or seek to reduce or eliminate the amount of parking provided on a site.
Samol estimated that there are more than 400 units “approved, proposed or potential” on eight to ten sites, including three to five city-owned sites, across the downtown that could benefit from an in-lieu parking program. Specific project details were not provided.
In recent years, the city rejected a housing development proposal for the former White Plains Linen site. A development proposal on Railroad Avenue was withdrawn. Several years ago, a developer proposed a 125-unit building at the former RAL building at 201 N. Division, but has not yet received project approval.
According to Tracy, if the in lieu parking system is implemented, the city projects about $2.5 million of developer funds coming from such parking fees in 2026, reducing the overall borrowing amount each time the fees are renewed on an annual basis.
The city is also in negotiation for development of housing and commercial uses on three sites on the waterfront which could help match Momentum funds and produce the required housing.
City Manager Alexander emphasized on May 19 the $20 million bond was a separate bond from a $6.1 million bond for vehicles, equipment, capital projects, and fire trucks, previously reported about in the Herald.
Public comments on Momentum project spending
Three residents had comments and questions regarding the $20 million Momentum grant bond resolution, and raised concerns about the increase in debt and its impact at the May 27 meeting.
Jen Zawacki asked if the significant debt increases down the line would be reflected in increased taxes for residents. City Manager Alexander said the debt payments would be an increased expenditure to be accounted for in the general budget relative to the general fund budget. He noted that future revenues, such as from the parking in lieu scheme, could offset the additional expense, but those are unknown at this time.
Elena Walker also questioned whether the city was preparing for another increase over the tax cap due to the debt taken from the project. City Manager Alexander said budgeting work would not begin until August, to be delivered in October.
Resident Garrett Dowd referenced the city website’s lack of comprehensive annual financial statements since 2021 and questioned how residents could know what the financial health of the city was. The city has since published annual financial statements for 2022 and 2023.
When Dowd asked about the possibility of not meeting requirements for reimbursement, Samol responded, “The intention is that we take this one step at a time and that we don’t take on the full debt of the full $20 million until we know that we can have achieved this housing that will allow us to get reimbursed.”
