To the Editor:

There has been significant public attention paid to the manner in which the town of Guilderland’s Industrial Development Agency handled the application for financial incentives by Hotel Devco LLC, a business organization with ties to the Pyramid Companies, the owners of Crossgates Mall.

This letter is provided to fully and accurately outline the nature of the transaction approved by the IDA board on May 31, and to correct any inaccuracies or misunderstandings that may remain in conversations about the IDA action.

Before evaluating the transaction itself, it is important to recall that the IDA’s actions were taken after a public hearing was held on the application on March 29. Numerous residents attended, and a number spoke on the application — some in favor and some opposed. A complete transcript of the hearing was prepared and posted to the town website.

Dozens of letters and emails were received — both in favor of and in opposition to the application. All were provided to the IDA board for use in its deliberations.

Finally, a public comment period at the IDA board’s meeting on May 31 provided an opportunity for additional comment immediately prior to the board’s consideration of the application of Hotel Devco.

With respect to the details of the approved transaction, the following should be noted:

First, no action of the IDA resulted, nor will it result, in any money in any amount being paid to Hotel Devco LLC, or to any related party.

Second, the applicant’s request to enter into a PILOT (Payment in Lieu of Taxes) arrangement with the IDA to reduce its real property taxes was declined by the IDA board. The IDA’s decision to decline this request was based on a complete review of the application and the public record by the IDA board and staff and a full and open discussion by the board. The completed hotel will pay taxes on its full assessed value to the town of Guilderland, to the Guilderland Central School District, the Guilderland Public Library, and Albany County.

Third, what the IDA board did, in fact, approve, was an exemption from the payment of sales taxes and mortgage recording taxes associated with the construction of a 192-room hotel on land between Western Avenue and Crossgates Mall Road and the closing of a long-term mortgage loan on the facility. The nature of these exemptions merits a full explanation in terms of its impact on taxpayers and taxing jurisdictions in the town of Guilderland.

Based on estimated amounts provided in Hotel Devco’s IDA application, the total amount of sales taxes exempted will be $800,000 (8 percent of $10,000,000). Of this amount, 50 percent (or $400,000) would, without the exemption, go to New York State. The remaining $400,000 would go to Albany County. Albany County currently distributes 40 percent of sales tax receipts ($160,000 in this case) to the county’s municipalities based on each municipality’s percentage of Albany County’s population. Guilderland represented 11.6 percent of total Albany County population in the most recent U.S. Census, so Guilderland would have received, had the sales tax exemption not been granted, 11.6 percent of $160,000, or approximately $18,600.

Mortgage recording taxes on the hotel project, based again on the numbers in the application, would amount to $225,000 (1.25 percent of $18,000,000). Of this amount, $90,000 would go to New York State, $90,000 to the town of Guilderland, and $45,000 to the Capital District Transportation Authority. Without the exemption, then the town would have received $90,000 in mortgage recording tax revenue.

Overall revenue that would have gone to the town of Guilderland in the absence of the exemptions granted by the IDA amounted to $18,600 in sales taxes and $90,000 in mortgage recording taxes, or a total of $108,600.

In consideration for granting the exemptions of sales and mortgage recording taxes, the Guilderland IDA will receive a fee of 0.5% of the $31,000,000 total cost of the hotel project, or $155,000. In other words, total revenues to be received by the town in connection with this project exceed the amount of exempted town revenue by approximately $46,000.

Additionally, the completion of the hotel project will produce several hundred thousand dollars each year in new property tax revenue, new sales tax revenue, and new hotel occupancy tax revenue, to be shared among the town, county, school district, and library.

We understand that some may assert that this project would have moved forward without the assistance provided by the IDA. The application received and considered by the IDA board indicated that the IDA’s financial assistance was needed to insure the project’s completion.

We take no position on the assertion that the project would have advanced in any case, since to do so would be speculative. We believe that any assertions related to the completion or non-completion of the project are simply speculative, and we would prefer to have any discussion of the IDA’s actions be based on an analysis of known facts, which we have presented in this letter. We hope that this clarifies what transpired at the May 31 IDA board meeting, as well as the long-term fiscal impact of the board’s decision on the town.

William Young           A. Joseph Scott          Donald Csaposs

IDA Board Chair         IDA Counsel              IDA CEO