Dear Albany Common Council members,

It's come to my attention that a resolution has been drafted that calls for the resignation of
the Capital Resource Corporation (CRC) board members who voted against the Charter
Facilities Finance Fund application. Given the controversy surrounding this vote, I am
not surprised by the need to defend my vote, however, I am uneasy about being pressured
to defend my vote under the threat of removal from the board(s) I have dutifully served.

The Charter School Facilities Finance Fund (CFFF) initially made two requests for
conduit financing and waivers of the mortgage recording tax (MRT) before the Capital
Resource Corporation (CRC) on October 13, 2010. Since that date there have been
several CRC hearings on these proposals, including several opportunities for public
comment. After listening to countless hours of testimony, reading hundreds of pages of
the applications and supporting materials, and speaking with those for and against this
proposal, I felt that beyond the fees paid by the applicant there was no long-term
economic benefit generated by the two projects before the CRC board. The 'test' the CRC
applies in all projects before us, as outlined in the founding charter of the CRC set forth
in Council Resolution 4.12.10R, demands review of job creation efforts to lessen the
burden of government, and provide for the public interest / community benefit. This
project, in my opinion, did not satisfy that test. Thus, I voted against the proposals on
February 17, 2011.

A resolution presented to the board, and passed unanimously before the final vote on
February 17, 2011, would have nixed the applicant's request for the MRT to be waived. It
could be argued that the short term opportunity cost of collecting the fee and MRT
would thus be $437,000. Given the applicant must now pay the MRT anyway, the true
opportunity cost of rejection is $262,000 - not the $600,000 that's been tossed
around. The remaining MRT, coincidentally $262,000, will be evenly
split between Albany County, NY State, and CDTA.

The amount of the MRT in Albany County is 1.25% of the face amount of the
mortgage. Albany County collects this tax, and then passes it along the the appropriate
parties. CFFF was requesting a full exemption of the MRT for a mortgage of an estimated
$35 million. In this matter, assuming a mortgage amount of $35 million, the amount of
the tax is $437,500.

Here's how the 1.25% MRT on $35million would break down:

• .50% is paid to the City of Albany = $175,000

• .25% is paid over to the State of New York Mortgage Agency = $87,500
• .25% is paid over to the Capital District Transit Authority = $87,500
• .25% is held by Albany County = $87,500

The agency fee generated by the CFFF application, on $35 million of conduit financing,
amounts to .0075% of the mortgaged amount. In this case, on $35 million, the fee
collected would have been $262,500.
For the 395 Elk St. proposal, The Brighter Choice foundation purchased 27
tax roll properties between 2008 and 2010 to prepare for the expansion of the middle
schools. The properties were purchased for $1.6 million dollars. These properties,
assembled into a larger, tax exempt parcel, accounted for a significant amount of tax
revenue for the city - revenue that is now lost forever. I cannot argue about the highest
and best use for these parcels, because that it above and beyond my duties as a CRC
board member, but the consideration that this conversion would result in lost tax revenue
for the city did concern me.

Albany is losing population. We have been an ever shrinking city since the 1960's, yet,
during this same period, the population of the Albany county has grown slightly, and the
population of region has grown by over 20% as the region decentralizes. Despite a
shrinking population, the taxpayers of this city have been asked to support a budget for
two school systems. In 2001 this city had 18 schools. In the ten years since, we now have
29 schools in this city, 12 of which are charters. CRC staff illustrated very well that there
have been staff reductions region wide as communities struggle with funding gaps for
public education and it was noted that this is certainly true in the city of Albany as well.
The argument was posed by staff "if teachers are being laid off in the suburbs, and the
suburbs don't have charter schools, then we cannot draw the conclusion that Charter
Schools are solely responsible for Albany City layoffs." This may be true, but we should
ask ourselves - if we cannot afford to pay the teachers we have today - why are
we building additional schools for teachers we cannot afford to pay tomorrow?

Was the board concerned about job creation? Absolutely. There's been a lot of talk about
jobs as being the ultimate determinant in economic benefit. I cannot commend the CFFF
application for job creation, nor can I criticise it. Have the IDA and CRC approved
projects that do not create jobs? Yes. Two key projects that come to mind are residential
projects that restored blighted buildings and these abandoned buildings back on the tax
roles. Not only are we reaping the benefits of increased property taxes, tenants of these
buildings have safe, high quality housing - housing they may have sought in another
municipality. The neighborhoods these properties are in are better because of these
rehabilited structures.

My votes against the MRT waiver request and the issuance of tax exempt financing was
the result of a great number of factors that drove me to the final choice I made. It was
never simply one particular aspect of the proposals, but a combination - and I believe
that's the reason that has made the decision difficult to comprehend for those who may
disagree with the votes.

The city of Albany needs to build a tax base to support an ever-growing budget. We need
residents and we need jobs. Economic development means creating good quality jobs for
city residents and creating programs that encourage people to live here, too. If we cannot
satisfy these two needs at the same time, then we're not accomplishing as much as we
should. The CRC must account for any and all potential externalities produced by a
potential applicant. We cannot just look at what a fee could do. We simply can't collect
fees in the short term and call it economic development. Voting in favor of this project,
just to collect a fee and saying "they'll go elsewhere" all the while thinking "this is a bad
move in the long-term," would have been a violation of the public trust. Could the city
use all the cash it can get? Yes. However, we cannot pay the $100 bill we get tomorrow
with the $5 we get today. The CRC board fails to uphold its purpose the minute it
considers a projects merits solely on "will they go someplace else?" and/or "will we get a
fee?" That, to me, is a slippery slope, a race to the bottom.

I must say that I am pleased to be having this debate about the CRC's mission and
priorities. It is my hope that the debate will raise questions about the process of
soliciting, accepting, and approving future CRC and IDA applications.

As such, I believe this body needs to ask itself several questions.

• Should it be the policy of these boards to approve each and every solicitation it
receives?
• Is the fee enough to warrant enough long term benefits to the community to as to
make every application worthy of passage?
• The board's "no" vote on the CFFF Project has come under criticism for the
board's perceived "anti charter school bias." In my understanding the board
believed taxpayers should not be forced to foot the bill for two school systems. If
the fee generated by an application is paramount, and there is no additional
economic impact required, how would the council react to an applicant proposing
to create a privately run, publicly funded, Police Department, Fire Department, or
Department of General Services?

It is not the CRC's job to debate the licencing of Charter Schools. It IS the CRC's duty to
debate the financial and social impacts of this industry's expansion on the city of Albany.
If that is not within the duty of the CRC, then the applicant should never have passed
muster to apply. Detractors will try and argue "All the impacts of these projects are still
going to be there, but someone else is going to use the fee revenue from the financing to
support their community." True, whether these two projects move forward is beyond the
control of the CRC. In fact, there is no local control at all over how many schools are
built here. The state of New York makes a great deal of money by taxing cigarettes - but
let me ask you - considering that the long term costs associated with smoking outweigh
the benefits provided by the excise tax, what's the point of keeping cigarettes legal? The
CRC cannot salivate over fees when weighing the long term effects of these projects.

I've always felt uncomfortable making this decision - the board was tasked with making a
difficult choice that no matter how we decided, would have a negative impact, either
short term or long term, on city taxpayers. I recognized the immediate benefit of the fees
generated. However, I could not in good conscience, cast a vote in which I felt in the long
term did not benefit current and future taxpayers and residents of this city. I feel no
differently about my choice today than I did immediately following my vote. I made a
difficult decision that I am proud of. Am I being asked to resign because I made an
unpopular choice or because I made an irresponsible choice? If for the former - how does
the council expect a fair and independent assessment of projects before the board if the
board is constantly under pressure to make politically motivated choices? If the
latter, shouldn't the Council be waiting for a legal determination of the board's actions
before demanding resignations?

It's unfair that people who don't agree with the vote have called out CRC members as
"anti-charter school." These accusations are baseless. I went to public school here, and I
believe that my education in public school prepared me very well for a successful life in
the "real world." I should mention that while I was in high school, Mayor Jennings served
as my vice principal. However, I cannot debate the fact our public schools are not
performing to the high standard Albanians have come to expect for them. I cringe hearing
my friends tell me they are fleeing this city for the suburbs to pay lower taxes and have
access to better schools. I believe in this city - that's why I live here. I also believe we can
learn a lot from Charter School's innovations - Competition is healthy, choice is good for
the community, and the Charter Schools have proven they produce results. However, the
street goes two ways. If I were to vote for the CFFF application before the board because
I felt their product, for lack of a better term, was better - then I'd be allowing my opinions
to drive my judgement. Charter Schools are here to stay. I did not vote to prevent the
foundation from building, nor did I make any statement about the merits of charter school
like many of my detractors, AND supporters have accused me of making.

The CRC isn't trying to make a statement, draw a line in the sand, or even comment on
education (that's not our purpose) we are looking out for the long-term economic and
social vitality of this city. An over saturation of school buildings isn't in the best interest
of taxpayers. It's that simple. If the only expectation of my service on this board is
collecting a fee - should this city even have an independent board? Is the sole expectation
of these boards that we approve any and all projects? I certainly hope that the debate
includes these questions. As an independent board member of the IDA and CRC, I must
make tough choices about projects that come before the board. I do not serve on this
board to make popular choices. I do not get paid, I do not enjoy perks or benefits to
serving, however I take this duty very seriously. At the end of every vote, I ask myself,
did I make a choice I am comfortable with? Am I able to go before my friends
and neighbors and tell them I made the right choice with the information I have in front
of me? Regardless of what the Council intimately decides, I'm fine with that. Regardless
of the outcome, I am proud to have served my city to the best of my ability. Thank you
for you support and for your trust.

Martin Daley
Independent Board Member
Albany Industrial Development Agency
Capital Resource Corporation
21 Lodge St.
Albany, NY 12207