City seeks foreclosure on CityGate properties; unpaid tax-related bills top $1.4M

The city is seeking to foreclose on several properties in the CityGate — the latest in an ongoing battle with the developer over unpaid property taxes.

Anthony J. Costello & Son built the shopping district, but has never paid its tax bills, according to the city.

The foreclosure action involves some $737,000 in unpaid property taxes accrued since a Payment in Lieu of Tax (PILOT) development incentive agreement was cancelled in 2018. Separately, the city is seeking a judgement for more than $700,000 in delinquent PILOT payments. That matter remains pending.

CityGate sits on Rochester's southern edge, sandwiched between Westfall Road and the Erie Canal. The sprawling 8-acre development is anchored by the national discount store Costco, which opened in June 2015, Five Star Bank, outdoor retailer REI and a handful of other businesses. Plans for loft apartments, offices and a hotel were never realized.

Namesake and founder Anthony Costello died in March 2016. The company has been mired in legal and financial matters since.

More:Awash in debt and ill will, Anthony J Costello & Son loses CityGate tax breaks

The city action involves the Costello properties nearest the corner of Westfall and East Henrietta roads, continuing south to include the REI site. The Costco and Five Star Bank properties are independently owned, current on taxes, and not part of the foreclosure.

With the foreclosure, the city would take priority over a number of judgments already entered or sought against Costello. That includes unpaid construction loans of $17 million owed to M&T Bank, and nearly $8 million owed S&T Bank, as well as $580,000 owed to REI for un-reimbursed improvements the company made to its building.

Should the city be successful, and then auction off the property for more than the taxes owed, additional proceeds would go to creditors.

A message left for Costello CEO Brett Costello was not immediately returned.

More:CityGate developer sues to reinstate tax deal, claims project is in 'grave jeopardy'

Contact reporter Brian Sharp at bdsharp@gannett.com or at 585-258-2275. Follow him on Twitter @sharproc. This coverage is only possible with support from our readers.