GUILDERLAND — Guilderland’s Industrial Development Agency has approved a tax exemption for $32 million in bonds that will be used to finance the conversion of the Best Western Sovereign hotel at the town’s eastern edge into an assisted-living facility to be named The Promenade at University Place.

The money that the developer, Promenade Senior Living, will save through this, said the IDA’s chief executive officer, Donald Csaposs, will be in the form of income-tax relief: When the bonds are sold, the interest on them will be exempt from income tax. For that reason, he said, the interest that the developer will pay on the bonds will be less than on a standard mortgage. If, for instance, this brought a savings of $100,000 per year, Csaposs said, over 30 years, the savings would total $3 million.

“We are grateful that we had tremendous community support that will bring affordable senior living to residents of Guilderland,” Steven M. Laufer, chief executive officer of Promenade Senior Living, said this week.

The benefits of this development project — in which Promenade Senior Living will turn the hotel into an assisted-living facility — go beyond the border of Guilderland, said Csaposs. It will be the only local assisted-living facility to have Medicaid-eligible beds, and while these will not be reserved for Guilderland residents, research shows, he said, that residents are likely to come from a limited geographic area.

According to the IDA application, “at least 40 percent” of the facility’s units will be maintained for “low-income seniors, thereby providing a much needed service to the Town’s lower income senior population.” The facility will be licensed for 200 beds, although architects are still working out the facility’s design, said Laufer.

The hotel was in a period of decline, Csaposs said, and retrofitting it to meet 2017 high-end hotel standards “was not determined to be financially feasible.” The property will be improved through this project, he said.

A new hotel is being built nearby on Route 20 by the owners of Crossgates Mall.

Finally, the jobs associated with the assisted-living facility will be “an upgrade,” Csaposs said, and will include professional staff such as registered nurses, physical therapists, and social workers. “The payroll will be considerably higher, as an assisted-living facility, than as a hotel,” he said. According to the application, the project will create 102 jobs — 16 of them professional, 21 skilled, 35 semi-skilled, and 30 unskilled — with an estimated average salary of $50,000, and a range of about $26,000 to $115,000.

The facility will also offer some activities for older people that will be open to town residents, and not just to residents of the facility, he said.

The IDA will be able to keep track of the facility’s job creation through periodic reports and inspections, and has established a “good, strong clawback agreement,” Csaposs said, through which it can demand return of the tax-exemption monies, if there were, for instance, an egregious failure to produce the jobs promised.

For the first time in the 10 years since Csaposs has been involved with the IDA, the board has granted a PILOT, or Payment in Lieu of Taxes, agreement, said Csaposs.

It is only the second time that anyone has requested a PILOT agreement, Csaposs said: The first request came this spring from Pyramid Management for the hotel it is now building on Western Avenue in front of Crossgates Mall. That request was turned down, although the Crossgates hotel project did receive sales and mortgage-recording tax exemptions totaling just over $1 million.

Csaposs said he cannot estimate the amount of the PILOT agreement for 1228 Western Ave., because that amount will be calculated on the basis of the assessed value of the completed project, and construction has not yet begun.

The IDA set a floor on the PILOT agreement, though, Csaposs said, explaining that the property will not be allowed to pay less in property taxes than it currently pays.

Guilderland’s receiver of taxes, Lynne Buchanan, said this week that 1228 Western Ave. was billed $50,954.67 in property taxes in January and $76,187.20 in school property taxes this fall. The PILOT agreement applies to both municipal and school taxes, Csaposs said.

Csaposs said that the IDA has a uniform tax-exemption policy, which says that the board’s standard for PILOT agreements would be to grant a 50-percent exemption for five years, and then to phase the taxes back in gradually, adding 10 percent per year, so that by the 10th year the owner is paying 100 percent.

The IDA has also granted the 1228 Western Ave. project $400,000 in sales-tax exemption on qualifying purchases of goods and services related to the facility’s construction, as well as $320,000 in mortgage-recording tax relief.  

New state legislation passed this summer, Csaposs said, means that part of the mortgage-recording tax — above and beyond the $320,000 — due to the Capital District Transportation Authority will in fact become payable in a few days, when the transaction closes. The one-quarter of 1 percent of mortgage-recording taxes that is used to fund metropolitan transit agencies was formerly part of the amount that an IDA could waive, Csaposs said.

Albany County Legislator Mark Grimm, a frequent critic of applications before the Guilderland IDA, said this week that he believes this particular transaction is warranted, “given the substantial benefit.”

He called on the IDA to keep a close eye on how many Guilderland residents wind up living in the facility, saying, “If Guilderland is carrying the freight, and its residents aren’t in there, then it’s not such a good deal.”

The IDA fee associated with this transaction is $320,000, or 1 percent of the transaction amount.

When this fee is added to the fees collected on other transactions completed over the last year or so — the hotel at Crossgates, and the approximately half-million dollars in sales and mortgage-recording tax exemptions awarded to the Mill Hollow II apartment project on Route 20 in western Guilderland — Csaposs said that the IDA may be able, for the first time, to invest a portion of its reserves in community development, beginning in 2018.

“The board will discuss, in open session, what to invest it in,” Csaposs said.

Laufer said he hopes that construction on the project will begin in December.

Promenade has five other facilities, including at Tuxedo and Middletown, New York. Laufer said that the company’s other projects have received “substantially similar” IDA tax relief. “Many communities support senior-living facilities,” he said, “because the ultimate beneficiaries are the members of the community and their families.”