Saranac Lofts developer seeks tax break

Town board discusses apartments designated for artists, which may break ground in spring

An artist’s rendering of The Carry, a building proposed on Broadway in Saranac Lake where the Adirondack Tire building currently is, which would have a commercial office and seven apartments. (Provided photo — Adirondack Park Agency)

SARANAC LAKE — The development company behind the Saranac Lofts, a 70-unit apartment complex for artists and mixed-income renters with commercial space proposed on partially vacant land between Broadway and Depot Street, is seeking a payment in lieu of taxes agreement with the town of Harrietstown.

Kerney Group Vice President Sean Kerney attended a town board meeting last week and provided a brief update on the project. He said he had hoped to break ground on the project before winter, but now it seems likely they’ll break ground in the spring — February or March — depending on the weather then. He said his company hasn’t closed on the sale of the property yet — in the spring, they’ll close the sale and break ground at same time.

Kerney is seeking a payment in lieu of taxes (PILOT) agreement — a negotiated local tax break — to pay the town a base of $70,000 per year for 30 years, with a 2% increase every year. The town board held off on making a decision on this last week.

Town Assessor Marten Tichenor said PILOT agreements are common — mostly in areas with more industrial development. But in Harrietstown, there are none that he’s aware of.

Town Supervisor Jordanna Mallach said the board wants to hear more about how the development group defines an artist, the criteria for apartment applicants and wants to see if Kerney can reduce number of artist-reserved apartments.

The site of the proposed Saranac Lofts apartment complex between Broadway and Depot Street is seen in May 2021. (Enterprise photo — Peter Crowley)

She said he will return to the board with more information sometime at one of their upcoming meetings, and then they’ll take a vote on if they’ll approve the PILOT or not. She said the board needs more information to feel comfortable making a decision.

Tichenor said, in either case, the project qualifies for a tax break for providing lower income housing under state property law. Under this law, the property would be taxed on the actual income it generates rather than the potential income it could generate, because Kerney plans to artificially lower rents at many of its units. The state promotes low-income housing development, so it offers these tax breaks. Tichenor said there are a few housing complexes which qualify for this tax break around town, but none as big as this.

But Kerney Group is seeking a PILOT agreement instead, which Tichenor said is more desirable to develop a stable budget. The group will manage the complex after building it with Parkview Development and Construction, LLC.

Tichenor said a PILOT would provide more consistency for the developers in what they are taxed. Two assessors might look at the same property and assess it at different values, he said, so a PILOT would make their payments more predictable.

The margins for low income housing properties between making a profit and losing money are very slim, Tichenor said.

He said a PILOT is a way for the town board to support a project they think will benefit the town with a tax break if that project wouldn’t be able to happen without the break.

There are also other low income housing complexes, he said, but they are owned by the town through the Harrietstown Housing Authority, so they are tax free.

The town negotiates with developers for whether they will get a PILOT agreement, and the other municipalities — the village and school district — levy taxes based on the town’s decision.

Tichenor said he can’t currently estimate how much the proposed building would be taxed at, but he said to him, as an assessor, it’s a good thing no matter what the town board chooses to agree to.

“Either way that they do this, it’s a benefit to both the taxpayers and people who need low income housing,” Tichenor said.

He said the developers are planning to build something for the town to tax. Right now, much of the property is vacant land not producing much value for the town.

Mallach said the town evaluates each PILOT request on a case-by-case basis.

Councilman Howard Riley likes this project a lot and said he supports the PILOT agreement.

“I just think it’s one of the best things that’ I’ve heard about happen to Saranac Lake in a long time,” Riley said.

What is an artist?

But Riley felt the term “artists” is throwing people off. The project has been commonly referred to as “artist apartments” and seen as being solely designated for artists.

Thirty-five units — half of them — would be designated for artists who meet eligibility requirements to live in. A portion would be rented to people earning 60% or less of Franklin County’s median income — currently $52,905 per household, annually, in 2020 dollars, according to the U.S. Census data. Others would be rented to people earning between 80% and 130% of the median income.

Councilwoman Tracey Schrader said she’s struggling with that term, too. She doesn’t want the development — and by proxy the town — to be “pigeonholed” into that demographic.

She said it’s the workforce who needs housing — people in the hospitality, trades and health care fields.

Kerney said after speaking to the town board last year, his group agreed to reduce the number of artist-designated apartments from 50 to 35, a reduction from 70% of the units to 50% of the units. Last week, board members asked if he can reduce the number of artist-designated units again. Kerney,

appearing reluctant, said he would see if he could, now that the project has been awarded grants.

Artists get preference, he said, but the units are not set aside for them. So if they don’t fill all those 35 units with artists, it’s not like they’re going to leave them empty, Kerney said.

Councilwoman Ashley Milne said she was scared to dissuade the very people they are trying to attract — even skilled artists sometimes do not think of themselves as artists, she said.

“People live by labels,” Milne said.

Kerney said his group markets toward a wider group, not just artists.

“We don’t brand this as artist housing,” Kerney said.

He also said the group’s definition of an artist is pretty broad.

Kerney said one member of the household needs to be certified as an artist. This could be a child, a student, a partner or a single person. Art does not need to be a full-time job for them, or even a source of income. They do have to show evidence of a body of work and an “ongoing pursuit” of the arts. He said Kerney Group has done a number of these artist community spaces in New York for the past seven years.

Village Community Development Director Jamie Konkoski said in other Kerney Group complexes, “artist” is defined by a local committee set up to vet applications.

Councilman Johnny Williams asked why Kerney has a focus on artists. He asked if it helps with getting funding. Kerney said it actually makes getting money harder sometimes, but he does it because he wants to provide “energy” as well as housing into the areas he invests in.

“It’s a good way to create kind of a community sense of place,” Kerney said, adding that he likes to promote like-minded collaboration.

He said other similar complexes give money to artist residents to teach after-school art classes to non-residents.

Konkoski said she got to tour the Kerney Group’s Queen City Lofts building in Poughkeepsie last year with former Mayor Clyde Rabideau and former Trustee Melinda Little. She said the units looked nice, and were uniform, no matter if they were market rate or low income units. There was also an artist maker space for the building’s artist residents.

Kerney Group also has similar artist space and apartment complexes in Rome and Oneonta, Konkoski said.

In July, the project got $6.5 million from the state for affordable housing development. The project also has been awarded a $100,000 grant through the village’s Energize Downtown Fund, which was set up by the Downtown Revitalization Initiative and is facilitated by the Franklin County Economic Development Corporation.

The proposed project includes two buildings — The Carry and The Loft.

The Carry would be a smaller, three-story street-side building with a commercial office and seven apartments, built where the current Adirondack Tire building is located. The Carry, a local nonprofit with the same name as the building, focused on supporting start-up businesses, would have a community room, artist work spaces and a residence for a live-in superintendent.

The project has also been awarded $400,000 through the village’s $10 million Downtown Revitalization Initiative grant to outfit The Carry with a co-working space for entrepreneurs.

The Loft would be a larger, four-story structure, holding 63 apartments. This would include 46 one-bedroom units and 17 two-bedroom units.

The Saranac Lake Development Board approved the project Tuesday in a 4-1 vote. Paul Herrmann was the one “no” vote on the project.


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