IDA hears from Tupper Lakers on hotel tax break
TUPPER LAKE — At a public hearing on a proposed 20-year tax break for the Crossroads Hotel project on Tuesday, the Franklin County Industrial Development Agency heard from Tupper Lakers who, for the most part, supported the hotel but had concerns about the extent, length and transparency of the proposed tax break.
The IDA board will ultimately have the say on whether the payment in lieu of taxes (PILOT) agreement will be granted. IDA Director Jeremy Evans said the board will take the remarks given in the public comment period into consideration in their decision.
The public comment period did not end with the close of the Zoom conference Tuesday. The IDA will continue to accept written comments and has not yet set a close date for the comment period. Evans said comments on the PILOT should be emailed to him at email@example.com.
In the meeting Tupper Lake village Mayor and Franklin County Legislator Paul Maroun asked IDA Chairman Justus Martin to extend the public comment period for 30 days after Tuesday.
Around 33 people participated in the call, with over a dozen speaking.
People asked the IDA many questions about the PILOT. Evans wrote down ones that could not be answered right away and said he would give answers to the people who asked them and make the answers public.
A PILOT allows developers to not pay certain taxes on the property and instead compensate the taxing entities with preset, lower payments. In this case, it is estimated to exempt developers from $2,334,319 in local property taxes to the town, village, school district and county over the course of 20 years.
The IDA will take ownership of the property and lease it to the hotel owners. Since the IDA is a tax-exempt organization, it extends its tax exemption to the property. The hotel owners, who benefit from this, would pay a fee to the IDA.
The hotel — a project of Crossroads LLC, owned by Tri-Lakes area residents Betsy Lowe and Nancy Howard and managed by Skyward Hospitality of Saranac Lake — is proposed to be built on the corner of Mill and Park streets. The hotel has traveled a long and complicated road to get to this point and still needs state Adirondack Park Agency approval.
Residents mostly had questions about how the PILOT works.
Elected officials expressed concern about the PILOT process being conducted through the IDA. Town board members have previously said they believe the IDA has not communicated with them enough.
Lodging owners were concerned about competition.
The total cost of the project is estimated to cost $10 million with a projected eventual building value of $4,125,000.
Lowe said in a call after the meeting that she and Howard currently pay around $13,000 a year on the seven parcels the hotel will sit on. Over the course of the 20-year PILOT, she said they will pay an average of $100,000 a year.
Jack Delehanty, a resident, said he believes the hotel will be a valuable asset to the town, but he said there was not enough transparency in the PILOT.
He believes Tupper Lake needs an amenity like this hotel but that the process of building it also needs to ensure the local governments find success.
He said the decision should not be made too quickly, as 20 years is a long time and his children will experience the effects of the IDA’s decision.
Rosi Littlefield, a resident, asked why, if the building of the hotel is estimated to cost $11 million, it is estimated to be assessed at $4.5 million. Evans said this is a good question for assessors. He does not know how assessing is decided and that the $4.5 million is just an estimate.
Cheryl LeClair, a resident, said she the supports hotel but dreads seeing the process of building it drag out any more. Evans said the PILOT proposal will not be altered through a long process. It will just be approved or denied.
Robyn Doolen, co-owner of Shaheen’s Adirondack Inn, asked if the hotel is expected to have a lower financial return than a “normal hotel” what counts as a “normal” hotel.
Skyward Hospitality head Jacob Wright said two feasibility studies for the project were done by Pinnacle Advisors out of Boston and HDS, the largest feasibility hotel company in the U.S.
He said they found the hotel would have lower than average occupancy, projected returns and internal rate of return for investors.
Wright said developers tried to get tax credits for the project but struggled because of the location in Tupper Lake.
“Business generates business,” Park Motel and Cabins owner Margaret Ernenwein said. “Overall this project should be a good project for Tupper.
“However, I am concerned that this amount of lifting to this new project would undercut how much they can charge and make me uncompetitive,” Ernenwein said. “I wondered if the IDA did any … impact study on the local businesses and how many will be driven out of business because of this.”
Evans said the IDA has not studied that.
Howard said her heart goes out to other hotel and motel owners in town. She said she sees the Crossroads Hotel as a complement as opposed to competition for them.
Maroun said getting a hotel in Tupper Lake is a priority for him, to add more rooms in the town for big events, which be believes will help tourism.
He said the project will also increase the town, village and school district’s tax revenue significantly, just slower than it would without the PILOT.
“We’re not going to lose any money,” Maroun said. “It’s going to be more than what we’re getting now.”
Village Trustee Ron LaScala said he was not happy about being unaware of this PILOT until just recently but that after talking with some people around Tupper Lake about the agreement, he feels it makes sense for the project.
Earlier in the day LaScala had been skeptical of the PILOT, but he said speaking with people who explained it to him made him feel it would be beneficial.
He said Tupper Lake needs more hotel growth for summer events.
He said he understands people’s transparency concerns and thinks the PILOT may last too long, but that he supports the PILOT “100%.”
Town council member John Quinn said he is not opposed to the PILOT in principle but is worried about the length of the proposed agreement and the transparency of how it is being conducted.
Quinn said he learned of the PILOT on Dec. 23, right in the middle of the holidays and with not much time for the town board to consider the tax revenue implications of it. He said he wishes the IDA consulted more with the taxing entities the PILOT effects.
“I don’t object to the IDA’s authority to grant these tax abatements,” Quinn said. “It’s in the law. It’s legal. But is it right? I guess that remains to be seen.”
Quinn asked if the town planning board or APA were were told about this PILOT and wondered if it will be renewable after 20 years.
Town Supervisor Patti Littlefield said she agreed with Quinn on all his points. She said in her years of authorizing PILOT agreements for the town, they were almost always crafted for low-income housing projects and never for private businesses.
She wanted more answers as to how the IDA has authority to grant a PILOT agreement.
Tupper Lake Central School District School Business Administrator Dan Bower asked about the potential impact on the school’s tax cap due to the PILOT. This is a big deal for the school, he said. The school’s goal is not to raise taxes, he said.
“We do have very limited ability to do that, especially in a time when aid from state is being reduced drastically,” Bower said.