GUILDERLAND — The hotel that Pyramid Management hopes to build next to Crossgates Mall on Western Avenue is applying for $2.4 million in tax exemptions from Guilderland’s Industrial Development Agency. This includes 1.4 million in real-property tax exemption, a form of tax exemption the Guilderland IDA has never approved before.

Michael Shanley, a partner with Pyramid Management, said that the hotel would have a positive impact on Western Avenue and “clean it up for everyone in the town.”

Republican Albany County Legislator Mark Grimm said, “In my district, I have a single mother of four kids who is struggling to pay her taxes, and she wants to know why Pyramid would be getting a $2.4 million tax break.”

A score of people turned out Wednesday night for an IDA hearing on the tax break. Some expressed hope that local labor would be used to build the hotel. Most were there to gather information and gave cautious support. Grimm alone was skeptical. He asked the crowd, “Who pays — Crossgates or you?”

Pyramid is in the process of seeking to have 6.5 acres of land that it owns on Western Avenue, immediately west of the main entrance to Crossgates, rezoned general business in order to build a 192-unit hotel there. The hotel would be “dual-brand” — with one full-service wing, one extended-stay wing, and a common lobby between.

If tax exemptions are approved, this sale/leaseback agreement would make the IDA the “paper owner,” which would then lease the hotel back to the developer.

Industrial Development Agencies, part of a program New York State started nearly half a century ago, are meant to spur economic development and job creation through tax exemptions and bond financing.

In addition to the $1.4 million in real-property tax exemption — which would be phased back in over the course of 10 years — the hotel developer has also applied for $800,000 in sales-tax exemption and $230,000 in mortgage-recording tax exemption.

The $800,000 represents 8 percent of $10 million in qualifying purchases that the developer anticipates making in the course of constructing the hotel — not only construction costs but everything needed for the furnishing and operation of the hotel, said Donald Csaposs, chief executive officer of the Guilderland IDA.

The $230,000 represents the tax that would ordinarily be due at closing; it is equivalent to 1.25 percent of the $18 million in mortgages that the developer has stated it intends to use to finance the project. Csaposs said this is broken down among the state, the county, and the Capital District Transportation Authority.

Csaposs said the phase-in model is “absolutely par for the course” for an entity that gets property-tax abatement from an IDA, anywhere in New York State. Phase-ins of 10, 15, and 20 years have been granted at a variety of jurisdictions throughout the state, he said.

At the hearing, Csaposs said he had received 14 letters, “overwhelmingly positive.”

 

 

The application

The developer intends to take out a total of $18 million in mortgages to fund the project; its total equity investment in the project is $9.5 million, according to the application.

 

 

 

Funds expended on the project in the last three years are $1.25 million, of which $1.1 million was used to acquire land, the application says, and the rest was real-estate tax costs.

The developer bought the project site, the application says, in 1988, 1993, and 2014, spending a total of $3.5 million.

The project would be completed in about the summer of 2018, the application says.

In deciding whether to approve the real-property tax exemption, Csaposs said, the IDA will assess how many jobs — particularly permanent jobs — the project would bring, as well as what other benefits it would have for the community.

“Construction jobs do factor into the equation, but not to the extent, obviously, that permanent jobs would,” said Csaposs. “We have an obvious interest, as a community, in ongoing employment for our residents.”

According to the application, the Crossgates hotel project is slated to create about 55 construction jobs and about 50 permanent jobs. The 50 anticipated permanent positions include 14 for room attendants and eight for front-desk agents.

“Most of the permanent jobs aren’t going to be real high paying, but it is still going to be 50 jobs,” Csaposs said.

The application says that salaries will vary based on job description and responsibility, ranging between $45,000 and $95,000 per year. Hourly rates, it says, will vary between $11 and $16 per hour. Benefits will be available to qualifying employees and will include options for medical, dental and life insurance; vacation and holiday pay; bereavement; and 401K. Employees may also qualify, it says, for discounted rates at other hotels.

Csaposs noted that the IDA has the option of approving certain elements of the application, and denying others, if it chooses.

Applications are considered on the basis of qualification, not need, Csaposs said, adding, “Need is a very subjective thing.”

 

 

IDA’s role

Csaposs said he believes that the state laws outlining the work of an IDA were intended to “at least try to keep subjectivity to a minimum, by setting standards and saying that any project that meets those standards and involves a benefit to the community and the creation or retention of jobs qualifies.”

The Guilderland IDA was established in 1973. It has approved projects, said Csaposs, for the Guilderland YMCA, the Western Turnpike Rescue Squad, the Wildwood School, and for refurbishing Hamilton Square Mall at routes 20 and 155.

Its bylaws call for the board to have seven members but, because of a vacancy, it currently has six: William N. Young Jr., chairman: James Shahda; Christopher Bombardier; Walter Pacholczak; Vera Dordick; and Kevin Hicks.

Board members are unpaid, said Stacia Brigadier, the town’s payroll administrator.

Csaposs is not a voting member. Despite his title as chief executive officer of the IDA his position is unpaid. He does hold a salaried post with the town, as a grant writer. None of the IDA members have offices in town hall, and a decision was made in 2008, he said, that a point-of-contact was needed there.

The IDA is separate from the town, although its members are appointed by the town board, Csaposs said. It is a public-benefit corporation, according to its section of the town website.

IDA agreements generally contain a “clawback provision,” which gives the IDA the opportunity to recoup a prorated amount of the money if, for instance, a company pulls out, or if actual job levels fall far short of the anticipated.

“This, if approved, would almost definitely have a clawback provision in it,” said Csaposs.

The project’s employment numbers would be routinely checked on by the IDA, said Csaposs, adding, “I guess by me.”

Guilderland has never put a clawback provision into effect — has never “clawed” funds back — said Csaposs.

An audit of IDAs released by the State Comptroller’s Office in 2011 said that the employment levels at three Guilderland IDA-sponsored projects had fallen short of the anticipated numbers. These projects were the construction of a facility for the Western Turnpike Rescue Squad, an update and expansion of the Guilderland YMCA, and an update and expansion of a building for the Wildwood Program. They were being financed for a total of $21 million and should have created 40 jobs and retained 209; Guilderland, as of 2009, had seen a loss of eight jobs, rather than any gain.

Csaposs said this week that employment levels at public-benefit projects like the Rescue Squad or Wildwood routinely vary from year to year. He added that a system-wide consolidation of operations throughout the Capital District YMCA resulted in the elimination of a number of positions at the Guilderland facility.  

A report from the state’s Authorities Budget Office from 2014 showed that a project sponsored by the Guilderland IDA — the renovation and expansion of Hamilton Square, formerly known as 20 Mall — had not created any new jobs. Csaposs told The Enterprise at the time that the data was misleading because the renovation of Vent Fitness and the construction of the new Starbucks and the M&T Bank were ongoing and not reflected in the data.

In August 2016 the IDA became the “paper owner” of Buck Construction’s building project, an 84-unit apartment complex just off French’s Mill Road in western Guilderland. Mill Hollow was originally slated to be senior condominiums, but the developer changed its plan to apartments and sought and was granted relief from the town on the age requirement of 55-plus, because, Steven Buck of Buck Construction said at the time, banks were unwilling to finance either for-purchase units or senior-housing projects.

The Mill Hollow project, Csaposs said, created only a few permanent jobs. The developer in that case did not apply for real-estate property tax, Csaposs told The Enterprise at the time, adding that the developer had chosen to concentrate on applying for the types of exemptions that were more likely to be approved.

Things that tipped the scales in Mill Hollow’s favor, Csaposs said, were that the development housed the town’s senior center and that the developer agreed to put in sidewalks. Sidewalks are expensive, he said, at about $950,000 per mile; the developer is set to put in about two-thirds of a mile in sidewalks.

Mill Hollow received sales-tax exemption on construction-related costs estimated at the time at about $3.8 million and a waiver of mortgage-recording taxes estimated at about $181,000.

As to the potential benefit to the community of a hotel on Western Avenue near Crossgates Mall, Csaposs said that an argument could be made that there is a need for another hotel in Guilderland. He listed the hotels in town — noting that he was not counting smaller establishments — and said, “At the moment we have Best Western, the Days Inn, and the Hampton Inn.”

He added, “The Best Western is going offline, and the Days Inn is kind of sketchy. So you’ve got one decent hotel in a community of 36,000.” The Best Western — at 1228 Western Ave., across from the entrance to the University at Albany — is being bought by Promenade Senior Living, a company that converts hotels into facilities for elderly residents.

Pyramid’s view

The Pyramid project is intended to attract visitors to Albany County for longer stays, the application says. A letter contained in the file from market and feasibility advisor Dan Martin says that guests at the hotel are likely to include visitors to SUNY Poly and people in town for job interviews or school visits.

Asked if the company will try to hire people who live in the town, Shanley said, “It’s difficult, as you can imagine, to limit it in any way to Guilderland residents, but we’ve learned from our past activities as developers and employers that, generally speaking, the closer you are to the mall, or the closer you are to this particular development, the hotel, you’re more apt to want to work there. So we would expect a good number of Guilderland residents to be involved in the hotel construction and, ultimately, management and employment.”

Shanley was noncommittal when asked if the project would still go through if the exemptions were denied. “We would certainly look at it,” he said. “But at this point we’re hoping to get some tax relief. Once we get a decision on that, we’ll evaluate where the project stands.”

After the public hearing, the next step, said Csaposs, would be a vote by the IDA. He said that he did not think the agency would set a date for a vote “until after the project is rezoned, assuming that it is.”