Home Banking & Finance New Rochelle IDA grants $2.5M tax benefits to self-storage firm

New Rochelle IDA grants $2.5M tax benefits to self-storage firm

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A $25 million self-storage facility to be built at the former Rotanelli Foods plant in New Rochelle will receive an estimated $2.5 million in tax relief.

new rochelle IDAThe New Rochelle Industrial Development Agency granted the tax benefits on Sept. 26 to New Rochelle Birch Development LLC of Bayside, Queens.

“Without the use of such benefits, the development would likely not proceed,” consultant Kevin F. Gremse of the National Development Council stated in a memorandum to the IDA.

The former frozen food facility at 2 Birch St. is across the street from a row of houses, near the busy intersection of Kings Highway and Main Street, and alongside the Metro-North Railroad tracks and New England Thruway (I-95).

Kanika Dewan, a construction and design entrepreneur in Manhattan, had been storing intricate architectural tiles and building materials in the building. She bought the property in 2006 from Specialty Brands LP, which had acquired Rotanelli Foods, and last year she sold it to the developer for $3.35 million.

Birch Development is a subsidiary of Black Mountain Partners LLC, a firm that specializes is building self-storage facilities at old warehouses and industrial sites.

Black Mountain will demolish the 1-story structure and build a 5-story, 152,000-square-foot climate-controlled facility with about 1,182 storage units. It will have three loading spaces and 12 parking spaces.

ExtraSpace Storage of Salt Lake City will run the facility.

Construction is expected to begin this year, according to IDA documents, and finish in 14 months. Occupancy is expected to begin by the end of next year.

The project will create 185 construction jobs, and two full-time and two part-time jobs when it opens.

Black Mountain is donating a large vacant lot near the project site to New Rochelle. The city plans to use the parcel for parking for a proposed maintenance facility nearby at Nardozzi Place.

The IDA authorized a $703,500 sales tax exemption, $175,000 mortgage tax exemption, and 10-year payment in lieu of taxes agreement.

The property is taxed at $114,434 a year. The full tax rate over ten years, developed, will be more than $3.5 million. But under the payment in lieu of taxes (PILOT) agreement Black Mountain will pay about 54 percent, nearly $1.9 million, for a tax abatement of more than $1.6 million.

Without the PILOT agreement, the developer would achieve a cash flow of $164,651 by the fourth year, Gremse stated in his analysis. With the pilot, the developer will see a $414,074 cash flow.

“Even with the proposed pilot,” Gremse stated, “the returns are fairly modest and a little lower than what is typically seen in the marketplace.”

When tax abatement ends after ten years, the full property tax rate will be more than three times greater than the current rate, according to his analysis.

By year 15, five years after the pilot ends, the developer projects a cash flow of $546,759 on revenue of $3,243,754.

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