IDA hearing generates comments from many

by Dan McClelland

First to speak during the public comment period was Town Councilman John Quinn, who repeated several points he made when the IDA hearing was discussed at the December 30 town board meeting.

“The town board just became aware of this PILOT project on or after December 23- two days before Christmas- when the notice appeared in the newspaper. The town board met on December 30 and voted to support the project” but had concerns about the proposed PILOT agreement.

On the PILOT plan, he said he didn't think the town board was opposed to it in principle. We have concerns, however, about the length of it and hence the loss of tax revenue” to the both the community and the school district.

He said he found the process “lacking in transparency,” given that there had been no discussion between the IDA and the applicant and the town board about the exemption plans.

Mr. Quinn said he hoped there “would be a reasonable deadline for public comments” on the plan- extending out into the New Year.

He said he tried to call but was unable to reach Mr. Evans prior to the town board's December 30 meeting so that he could invite the IDA leader to attend and explain the financial plan and the reasons for it.

He said in the public notice there was mention of finding the plan on the IDA web site, but he was unable to find it there.

“I don't object to the IDA's authority to grant these tax abatements. It's in the law. It's legal. Is it right, however? I guess that question remains to be seen!”

He said any financial proposal done by the IDA should be done in consultation with the local taxing entities which will be the most effected by this process.

He wondered if the village and town planning board and the Adirondack Park Agency were aware of the PILOT plan “so they could consider it as part of their analysis of the impact on the community.”

He asked if the PILOT would be renewable at the end of the 20 years as many PILOTs are.

Tupper Lake Supervisor Patti Littlefield also mentioned several things she noted at the recent town board meeting.

“I agree with everything John said, as far as the town goes. We do support the project but I've had a little experience with PILOT projects in Tupper Lake since about 1980. My experience is that the owners of the company always approached the taxing entity. Back in the day there was two separate taxing entities in Tupper Lake- the village and the town since both the village and town had their own assessors.”

“Years ago the applicant would come before both boards and present their case and ask for a PILOT. All of the PILOTS granted these past several decades were for low-income or elderly housing. I don't recall any granted for private, retail businesses! I don't believe there are any here.”

She said she was concerned that not everyone in Tupper Lake was aware of the PILOT proposal, given the way the announcement only appeared in the Saranac Lake newspaper and when it appeared on the Christmas weekend.

“That's why we brought it up at our recent meeting so the public would be aware of the hearing.”

“I'm thankful there are so many people here this afternoon.”

She said like Mr. Quinn she hoped the public comment period would be extended some weeks.

“I don't know how the IDA can do this. I don't know the law, with respect to PILOTs, so I need to be educated on this! The fact that someone can go to the IDA and a public hearing is held and then the IDA tells the taxing entities in Tupper Lake you now have a new PILOT agreement. And that without us ever being aware of it, except for finding out through the notice you sent. So I don't know how the village and town and school fit into this process!”

“I'd like some clarification on how the PILOT through the IDA all works.”

“I noticed in the newspaper several weeks ago when a hotel project applied for a PILOT in the Town of North Elba officials there said flatly they don't grant PILOTs.”

“I'm concerned about the fairness of a PILOT for 20 years when there are other avenues to get tax breaks for new businesses starting.”

“It's also concerning for other businesses in Tupper Lake who paid the full shot- motels and other businesses.”

“We'll see what you end up with, but I think we should tread lightly creating a PILOT for 20 years!”

School District Business Manager Dan Bower asked several questions on what he called “a project that is exciting for Tupper Lake.”

“I have an obligation to provide our school board with the best information about this I can.

He wondered how the assessed value figure on the base evaluation was calculated at $30,600. He said the current assessment on those properties on Park, Mill and Lake streets is about 338,000. “I wonder if you could talk to the $300,000 difference in figures?”

He also asked the IDA officials to tell him how the PILOT would effect the calculations of the tax cap for the taxing entities in the community.

He said the new abatement is being proposed “at a time when state aid is being reduced drastically.”

Jeremy Evans, in answering the second question about any impact on the tax cap calculation, said “it gets worked into the work sheet that has to be completed each year by the taxing jurisdictions. He encouraged the taxing entities to use the estimates that were provided that day and plug them into their respective work sheets.

He said Mr. Bower was correct that the current assessed value of the various properties was $338,000. He said he was told by Assessor Paul O'Leary that if all the properties were merged and the buildings all removed that estimated assessed valuation would be $30,600.

Lake Simond Road resident and retired assistant district attorney Jack Delehanty said the hotel proposed “will be a valuable asset” for the village and the town.

“I'd like to echo a couple of Mr. Quinn's and Mrs. Littlefield's comments, however, with regard to the element of transparency. We want success in the village and we need an amenity such as this. But we're in a situation where I think it would behoove the applicant to have as much of a coordinated review of this matter as is humanly possible. We've got experience in Tupper Lake as to what happens when you've got a bifurcated or three-part review or a completely fractured review. If I were an applicant I think I would want everything to happen at once instead of putting the financial part of this out front. I think it would be appropriate to have the community understand the complete implications of this project with regard to location, amenities, local approvals by the planning board and any zoning decisions which need to be made, in addition to the financial elements of the plan.

“I do think as well that 20 years is a long time. I know I probably won't be here in 20 years and I don't want my kids to have to pay for this!”

“There are things that are wonderful about this project and about the people behind it. They are winners and I support them moving forward on this!”

“But I think we should move at a pace. I don't think we should be precipitous about anything that happens here, especially with regard to the financial impact and implications of the taxpayers of our community.”

“I hope the notice of public hearing passes muster and I hope the record would remain open for an adequate period of time to allow the entire community to weigh in on this project and its implications.”

Rosi Littlefield of Lake Simond Road asked a question about the numbers presented that afternoon. “If you have spent nearly $11 million building the hotel, why are you predicting it is only going to be worth $4.5 million? And if the assessor were to say: 'double that number!' am I right in thinking all the numbers in those columns would double?”

Jeremy Evans said he couldn't explain why “an improvement to a property doesn't equate to the same increase in assessment. I don't know why that is...that's a good question for assessors. It's very common that that's the case.”

He said Mrs. Littlefield's assumption was correct that if the evaluation or assessment number increased so too would all the numbers in annual PILOT schedule in corresponding fashion.

According to Mr. Evans, “that's why I've been stressing that these are all estimates based on two factors: the assessed value of the project” when built and the tax rates of the respective taxing entities.

Rosi said she would love to hear from owners Betsy Lowe and Nancy Howard how they got to this point in the PILOT process.

Ms. Lowe said the partners met with IDA officials to explore the possible exemptions to help their financing of the project and to make the whole project feasible.

She asked Jacob Wright, whose firm is managing the various aspects of the project, to continue.

Mr. Wright said they tried unsuccessfully to find “new market tax credits” because the funding in that program had dried up.

“They wouldn't fund us in Tupper Lake. Sometimes they have problems with hotels in certain geographic areas.” He said considerable resources were spent in that search until it eventually fell through.

“We had a meeting with the IDA and Jeremy to review the benefits that New York State and the county offers new development projects” in the early fall. “We went through its entire application process. I attended an IDA board meeting and then notices went out.”

He said they started the zoning process with the village and town back in January 2019. “For the past 12 months we've been at meetings with the planning board and zoning board of appeals here and with the Adirondack Park Agency staff” to secure our permits. He said he just learned they should expect their approval from the APA this week.

“That gives us full entitlements for the project to move forward.”

“Now we're finalizing our financing to hopefully make the project happen!”

Betsy joked that just buying the parcels of property over the years was “a 20-year process.”

Robyn Doolen, co-owner of Shaheen's Adirondack Inn, questioned a statement in a newspaper article in the Adirondack Daily Enterprise that day that quoted Mr. Wright saying the new hotel will likely have a financial return lower than a normal hotel.

At past public meetings here the professional developer said the boutique hotel proposed here has attracted what he called “angel investors” who were not seeking a big return on their investments but who were investing here to help the downtown area and the community at large.

She asked if Mr. Wright could speak to that statement and any statistical data he has to back it up.

She wondered which hotels were compared to the proposed one here and where they were located.

“Is there a projected ADR (average daily revenue) to determine this?”

Mr. Wright said there were two feasibility studies completed for the project- one by Pinnacle Advisors of Boston and one by HVS- the largest hotel consulting company in the nation.

HVS does regional and national comparisons of ADRs and daily occupancies. Those studies compared our proposed hotel compared with the average hotel in the northeast and across the country. “The predicted ADR and occupancy rate is less than your normal hotel. When you raise private equity for hotel investments the internal rate of return (IRR) that is expected by investors is significantly less than a standard hotel project.”

He said the new hotel is being built at a time “when the hospitality industry has been decimated. Building a hotel today is essentially impossible so hopefully we can pull this one off!”

He said their information comes from the two feasibility studies commissioned and from his own experience as an instructor of hotel feasibility at Cornell University. “At our firm we do our own internal analysis of the numbers.”

He said he also gets a STAR report every week on what the franchise hotels and motels in Lake Placid and Saranac Lake are reporting in occupancy and revenue numbers.

“Occupancy rates in both villages were down 58% last week,” he gave as an example of what those reports tell him.

“So you take those numbers and figure you're in Tupper Lake and not in Lake Placid so you are not going to have close to those same ADR and occupancy numbers.”

Park Motel co-owner Maggie Ernenwein said she's always believed that “business generates business and that overall this should be a good project for Tupper.”

“However, I am concerned with this amount of gifting to this new project. It may undercut how much they can charge and make others like me uncompetitive. So I have a lot of concerns about it. I wondered if the IDA did any kind of study on the impact of it on other local businesses” and how many other accommodations places “will be driven out of business?”

Mr. Evans told her the IDA did not do an impact study, “although we do have impacts like the number of jobs that will be created.”

“So you don't have any balance of the jobs we will lose compared with the jobs created?” the Park Motel co-owner pressed.

The IDA representative said they did not have that information.

Trustee Ron LaScala, an outspoken member of the village board who was in the village court room that afternoon, admitted he was unaware the PILOT was under consideration for this project. “I was fortunate to get a hold of Jeremy today and he spent a good amount of time explaining the entire process.” He said before then he was not that familiar with PILOT programs.

“After listening to what Jeremy had to say and discussing it with some people in the community, it does make sense! The 20-year term, that's a long time. It's a career in most people's lives.” He said he didn't know why the term of the plan had to be that long.

“At the same time I feel we need more rooms in Tupper Lake in the summer-time. Hopefully with the rail/trail coming that will be a problem for us too in the fall and winter.”

He said the new hotel will be very positive for the community.

“As it stands now with the information I have, I will support this 100%!”

He said he did understand the concerns about transparency, given the single notice about the event published in the Adirondack Daily Enterprise on Christmas weekend.

He said he was sure that Mr. Evans would like to have given the local public more notice about the hearing.

“For the money we're not getting up front, I think it'll work for us on the flip side!”

Mayor Paul Maroun thanked everyone for their comments that day and said he will ask the IDA chairman Justus Martin to extend the public comment period for 30 days. That way the people of the community “can give you written input about how they feel about this!”

He said Supervisor Littlefield's comment about North Elba is “not the same as Tupper Lake. North Elba doesn't need any more rooms right now. Officials there don't need to offer an incentive to get someone to build a hotel in Lake Placid because it's a destination point for the world.

“We need an incentive to permit people to have the financial ability and stability to have a hotel in Tupper and allow it to continue to grow after the first few years. With a hotel in Tupper Lake we will be able to draw more tourists to our area.”

The mayor said he hoped the IDA would answer the questions raised and the questions that come in the weeks ahead and respond to all questioners “so we have a full understanding of the fiscal dynamics of the plan.

He said the village board worked with the developers to find the 12 off-site parking spots that the zoning board of appeals required in its permit.

Mr. Maroun said he believes too that when the hotel is built it's assessment will be more than $4.5 million, based on the $10.88 million estimate to build it. “And that way we'll see an increase in our tax base.”

“Overall, it will be a benefit to all the taxing entities and the community at large.”

He said he looked forward to the village working with the IDA and the owners on this project.

Cheryl LeClair said she was “totally supportive of the idea.”

She said she believes it will add to the appeal of the community's natural assets.

“-But I really dread seeing this project dragged down. We lived through more than 12 years of the previous project (Adirondack Club and Resort) that didn't pan out because of so many hoops they had to be jumped through. I would hope this project could be condensed.”

She wondered if the numbers shown in the payment tables “were written in stone or is there room for negotiations to help out but maybe not over 20 years.

Mr. Evans said the negotiations were crafted by the IDA staff, the applicant and the IDA counsel. “This is the proposal being considered and on the table.”

He said it will be up to the IDA's board of directors to make the final decision and it's only official when the board does that. The board hasn't considered the proposal yet and is awaiting the conclusion of the public comment period so it can review all those comments.

He said too the board does have the authority to change the request, with the permission of the applicant. “There's always room for negotiations” before the final board resolution.

Jerry Selini called a 20-year plan “excessive.”

“I don't mind helping someone get started, but a heckva a lot of things can happen in 20 years. We saw what happened in town in ten years!”

Terry Doolen, referred to the Enterprise article about the hearing that day, said the story reported that in the first year of the PILOT only the basic value would be taxed. “In the second year it would be the base line assessment plus 5% of the new assessment.” He asked Mr. Evans for an explanation on the new assessment.

Jeremy said the payments from the owners would come in two parts: the taxes generated on the parcels of land before the building starts and then in each successive year the building’s assessment is added in on an upward sliding scale, beginning at 5% in the second year.

“So you have the land value and the new assessed value of the building, once the hotel is complete and the town assessor assesses it.”

“We have estimated that is approximately $4.1 million and the assessor will make a final determination once the project is complete.”

“Would this be done every year?” Mr. Doolen asked.

Mr. Evans said the hotel would be assessed only whenever there was a new total re-assessment of the community.

Free Press Publisher Dan McClelland echoed several of the points made by earlier speakers that the public comment period needs to be extended into the new year. He said it was an unusual way the single legal notice came to be and the notice was missed in the Free Press. “Had it been a different time I think there would have been a lot more people here.”

“I would urge the IDA board to keep the public comment period open for another 30 days or perhaps even 60 days.”

He wondered if the IDA had set a closing date and Mr. Evans said it hasn’t been set yet.

He said there’s no chance the public comment period would end at the close of Tuesday’s hearing.

“Anyone and everyone is welcome to submit written comments.”

He said there was no date for the IDA board to act on the proposal, noting the board meets the second Tuesday of each month and it would likely be the subject of discussion either in January or February.

“Right now we’re listening to all the comments and we’ll keep the public comment open” for a time.

Mr. McClelland called the hotel project “a great project. The people behind it are great people. The community is looking forward to this hotel happening and it will greatly boost the economy of the community and particularly the businesses of the uptown business district.”

He said those who pay a lot of property taxes here are “sensitive to any more burden” and were looking for some relief by the expected growth of the tax base when the new hotel arrives.

“If we can do something to make this project a go, then that’s something we should strongly look at!” See editorial this week.

Co-owner Nancy Howard, who was president of the Tupper Lake Chamber of Commerce here for years, said that she and Betsy have always looked at this “project as a complement to existing motels. As a full-service hotel we think it will attract new people to Tupper Lake over and above our faithful, long time guests” who frequent the local motels.

“As I worked with the chamber over the years it was so clear to me, the people who came to the triathlon and other events each year fell in love with Tupper Lake and were very sorry they couldn't find places to stay in Tupper Lake!”

“This increased my interest and enthusiasm in continuing with this project!”

“I know for a fact, and so does Betsy, that the weddings we do at the Wild Center attract many, many guests who could not stay in Tupper Lake.”

Those in attendance Tuesday were Ms. Bourgeois and Russ Kinyon of the IDA staff, IDA board members Jim Ellis and Steve Erman and IDA chair Justus Martin, hotel developers Betsy Lowe and Nancy Howard, Jacob Wright of the firm helping to develop the project, Skyward Hospitality, and several of his people- Bayle Reichert, Tom Accordino and Michael Doran, Marcy Gotzmer, marketing and business director for the Franklin County Local Development Corporation, planning board member Jan Yaworski, Town Supervisor Patti Littlefield, Town Councilman John Quinn, Mayor Paul Maroun, Trustee Ron LaScala, Dan Bower, school district business manager, Russ Bartlett, superintendent of schools, village code enforcement officer Peter Edwards, Melissa McManus, community development director and local residents Sue Moeller, Maggie Ernenwein, owner of the Park Motel, Cheryl LeClair, Jack and Susan Delehanty, Donna Sloan, Hope Frenette, John Gillis, Robyn and Terry Doolen, owners of Shaheen's Adirondack Inn, Jerry Seleni and Rosi Littlefield.

After the hearing Stewart Amell of McLaughlin Ave. and a retired superintendent of schools suggested the IDA or the town or village prepare a question and answer document to better inform residents about specifics of the PILOT application. Keep questions and answers simple and to the point and post it on their respective websites and in the Free Press. “I understand there is a 30-day comment period in place and this document would be a valuable instrument to educate folks. I believe it's difficult to ask for comments when most community members lack the knowledge of what a PILOT program really means to the community.