GUILDERLAND — The Guilderland Industrial Development Agency on June 27 sought and received more information from Pyramid related to the multi-million-dollar tax-break and condemnation requests the company has made for the planned Costco Wholesale project.

Crossgates Releaseco, a Pyramid LLC, is planning to build a 160,000-square-foot Costco store on 16 acres at the corner of Western Avenue and Crossgates Mall Road. Overall project cost has gone from $39,900,100 to $41,400,100, with machinery and equipment costs accounting for the entirety of the increase, from $8 million to $9.5 million. Pyramid in May increased its sales- and use-tax exemption request from $5 million to $26.55 million. 

The company has requested $2.2 million in tax exemptions — $2,123,600 (up from the original ask of $400,000) in sales-tax relief and a $75,000 break on the state’s mortgage-recording tax. Pyramid has said it won’t build Costco without the tax break.

On June 27, company representatives responded to a dozen prepared IDA questions:

— What would be the impact of Pyramid’s default on loans secured by Crossgates Mall on the Costco project?

Milan Tyler, an attorney from Phillips Lytle speaking on behalf of Pyramid, told the board, “The short answer to your question is none.”

Tyler then said, “The longer answer to your question is: Because the ownership of the two projects is different, a default with one is not affecting the other one. And, since the Costco project is a single-tenant lease, it is utterly unrelated to anything happen[ing] at Crossgates.”

Pyramid recently defaulted on its nearly $244 million mortgage for Crossgates Mall, which is adjacent to the Costco project site; that debt is due to be auctioned off. 

Tyler told board members, “We’re very confident that we’re going to work the Crossgates Mall out.”

— Discuss the most recent litigation commenced against the town’s zoning board and how it impacts the project.

Tyler began by pointing out that Pyramid and the town of Guilderland have turned back every challenge the project has faced. 

Recently, a fourth suit attempting to stop the project was filed. 

“Crassly, it’s a delay only,” Tyler told the board. “And that just increases the cost and delays the benefits that we’re trying to provide to the town.” 

He said he’d “love to comment on the motives of the litigants. But as you may appreciate, since it is an ongoing piece of litigation, I don’t want to say anything that will prejudice the action going forward.”

Asked if he had any idea when the suit would be resolved, Tyler said he didn’t “have any updates.”

IDA board member Paul Pastore asked the IDA attorney, A. Joseph Scott, if the pending litigation prevented the board from making a decision on Pyramid’s requests, or if it would be “prudent to wait out that decision for an ultimate resolution from this agency.”

Scott told Pastore, who is himself an attorney, that the suit wouldn’t prevent the IDA from making a decision, but said the litigation might prevent Pyramid from wanting to move forward with the request because it “can’t put a shovel in the ground” until the suit has been resolved. 

Tyler agreed with Scott, but said, “Quite honestly, we are confident that the ZBA litigation is going to be resolved in our favor.”

— Discuss Pyramid’s interactions, if any, with the Albany Pine Bush Preserve Commission related to potential environmental issues associated with the project, as well as steps taken to mitigate those concerns.

Tyler said Pyramid had been “actively collaborating with the Albany Pine Bush Commission, including its technical committee,” for many years.

He said the “partnership has been characterized by regular communication and consultation, particularly during the SEQR [State Environmental Quality Review] process and the issuance of special-use permits.”

Tyler said the Pine Bush Commission had “been deeply involved in our operations, providing valuable feedback and comments.”

He noted that the commission had expressed in writing that it did not believe the planned Costco “would not lead to potentially significant negative impacts on their ability to create and manage a viable preserve, as detailed in the 2017 management plan update.”

Tyler said, “This indicates their support and alignment with our objectives.”

He also said Pyramid would be donating 8.4 acres to the Pine Bush, which is located within the city of Albany, just north of Crossgates.

Christopher Hawver, the Pine Bush Preserve Commission’s executive director, told The Enterprise this week that the commission doesn’t “really have any issue with the Costco project.” He said, while the project is “within our study area,” it’s not located in an “area that we’re recommending for any level of protection.”

Hawver said, “So there’s really no impact from our standpoint.”

But to say the commission supports the tax relief and condemnation requests, “I wouldn’t say that we support it,” Hawver said. “We certainly wouldn’t support projects or tax breaks or eminent domain requests — that’s outside of our purview.”

The commission has made project recommendations “like the use of native landscaping and specialized lighting,” Hawver said, “but that’s all.”

— Discuss the differentiated products that Costco will provide — in comparison to three existing area competitors: BJ’s, Sam’s Club, and Restaurant Depot — and how that differentiation potentially impacts other businesses.

Tyler couldn’t really offer up any differentiated products, acknowledging that “there is a large overlap,” and effectively made a brand-loyalty argument as to why a Costco is needed. 

“I think the important thing is that there’s no Costco now in this area, and I think each of the different retailers has their own sort of following,” he said. “So there’s people who will travel great distances to go to Costco, typically between 50 and 100 miles.”

Tyler said currently local residents who want to shop at Costco either have to drive 87 miles to West Springfield in Massachusetts, or, if they want to stay in state, 120 miles to Rockland County. 

— Discuss the losses and increased costs that Pyramid has referred to in connection with the project’s pending and prior litigation, which have resulted in delays on the project. 

Tyler called the litigation “quite honestly, unfortunate,” and said it “drives up our costs in terms of the actual litigation, the lawyers and all of that, [and] also delays the project.”

But he did not offer the board an actual dollar amount incurred by Pyramid due to project delays. 

— Provide an update to the 2019 and 2022 Camoin fiscal impact studies.

Tyler said Camoin’s update at May’s public hearing was the latest update.

At the May meeting, Camoin’s Jessica Tagliafierro offered an update to the board that mirrored the company’s 2022 update of its 2019 impact study.

The project’s total annual financial benefit  — payroll as well as property, income, and sales taxes — totaled about $14.5 million, over a third of which would directly benefit Guilderland, about $5.5 million:

— Estimated net new property taxes: $19,630;

— Estimated total direct payroll (assumes 50 percent Guilderland residency): $4,741,429;

— Estimated total indirect payroll (assumes 50 percent Guilderland residency): $600,059;

— Estimated state income tax at 4 percent: $427,319 (total for Albany County); and

— Estimated sales tax revenue from on-site sales and employee earnings: $166,114.

The project, according to Camoin’s analysis, would generate 152 net new jobs in Guilderland.

— Properties located within the project site allegedly restrict the use of the properties to residential-only. 

“Describe the purported deed restrictions,”  said Donald Csaposs, the IDA’s chief executive officer.

Lauren Weber, another Phillips Lytle attorney, told the board, “These deed restrictions have become obsolete and unenforceable due to several reasons.”

For instance, she said, “The current use and character of the area, which is primarily business-oriented, no longer aligns with these restrictions.”

Moreover, she continued, “The town’s transit-oriented development overlay [district], sanctioned by Guilderland, has rendered the remaining residential parcel non-conforming. This plan not only confines the parcels’ future use to commercial activities but also stipulates a minimum lot size of 25,000 square feet within the development district.”

Notably, Weber said, “Thirty-seven out of 39 parcel owners have submitted statements expressing their belief that these deed restrictions are neither valid nor enforceable, and they have not objected to the IDA’s taking.”

Weber failed to mention that various Pyramid LLCs make up nearly every acquiescent parcel owner.

Csaposs said there were five unrelated Pyramid properties subject to the eminent domain request. “Do you anticipate any of these property owners contesting the proceeding?” he asked Weber.

She told him three of the five owners “have already expressed their lack of objection to the IDA’s taking,” while the two remaining parcels do not “fall within the actual project’s footprint.”

Weber said of the two remaining parcels, “One has been a commercial use in that parcel for quite some time. And the second parcel, that property uses residential, which as I mentioned previously, is no longer a permitted use given the transit-oriented development plan.”

While Weber said she couldn’t “speak as to whether or not any of those entities may contest the IDA’s taking,” she said, “we have reviewed it ourselves in-house and we are satisfied that the burdens that are required under the eminent domain procedure law are more than satisfied.”

“Could you describe the residential property’s location within the project area from which you don’t have an affidavit?” Csaposs asked.

He was told it was at the intersection of Western Avenue and Lawton Terrace, or 1685 Western Avenue, which Pyramid said it understood would remain a residential use. 

— In addition to the new roundabout at Interstate 87 and Crossgates Mall Road, what other traffic improvements are being installed?

Jim Soos with Pyramid explained Crossgates Mall Road from the dual-branded Hilton driveway to the intersection of Rapp Road will be part of a “road diet,” where there will be one lane going in each direction with a middle turning lane — currently, that stretch of road has two lanes running in each direction. 

— Discuss and describe Pyramid’s planned pedestrian improvements.

Soos told the board there will be sidewalks and multi-use paths that will wrap around both the north-south section of Crossgates Mall Road as well as an east-west portion. And a sidewalk will be installed along Gabriel Terrace to Crossgates Mall Road, where a signal and crosswalk will be installed. 

— Discuss the connectivity of the project. And will there be pickup and drop-off locations for CDTA [Capital District Transportation Authority] buses at and around the project site?

David Aiken of Pyramid told the board of existing CDTA stops at Crossgates Mall and along Western Avenue.

— Discuss how project costs have increased. What materials does Pyramid expect will be subject to the sales- and use-tax exemption? Explain the increase in the amount of the sales-tax request.

Tyler told board members, “Just as, in 2017, when Pyramid applied to this IDA for benefits for the dual-branded [Hilton] hotel in Western Avenue, the intent was to have all of the sales-taxable items exempt from sales tax.”

Pyramid has since sold the hotel.

“And so,” Tyler went on, “the thought was everything that would otherwise be subject to sales tax would, in fact, be exempt. And as you know, that’s sort of a gray line, right, things that are so incorporated into the real property used to become real property have their own separate exemption.

“So it’s [not] until you start talking to contractors, [that] you really know the exact value. So, in this case, the original number set forth in the application was based on one set of assumptions as to what would be exempt. And after that, we found that the project costs had increased — primarily with equipment and internal FF and E (Furniture, Fixtures, and Equipment) … increased costs [that] would otherwise be subject to sales tax.

“And as we went down the road through the process, in talking to both Costco and contractors, it appeared that more and more part of the project costs would otherwise be subject to sales tax. So we came and asked for the additional amount.”

— Is there any additional information the project applicant would like to provide regarding the public benefit and need regarding the eminent domain acquisition as well as the project?

The board was told that the public benefits from job creation, both construction and full-time Costco jobs. The other benefits highlighted were infrastructure improvements and adding to Guilderland’s tax base.