The Mount Vernon Industrial Development Agency approved its first project of the year on June 23 when it endorsed an industrial laundry.
Regent Hospitality Linen Services of Richmond Hill, Queens plans to build a $6.1 million laundry for hotels in a little-used warehouse at 130 South Columbus Ave.
“Hotels can’t operate without bedsheets,” said Mandy Lema, managing partner of the firm said at a June 17 public hearing. “It’s a necessity.”
New York City hotels devote as much space as possible to rooms and other revenue sources, she explained, so their linens must be cleaned off-site.
The company has already lined up enough customers, she said, to make the business profitable. Some of the work will come from hotels owned by the partners: Lema, Xiao Dong Zhao, Joseph Huang and Ingrid Almanzar.
Regent Hospitality asked the IDA for tax incentives that will total an estimated $958,000 over 10 years, including exemption from property and mortgage taxes and relief from sales tax on materials and equipment.
The company will make payments in lieu of taxes beginning in 2018. At $1.85 per square foot on 15,000 square feet, the payments will begin at about $27,750. Payments will increase by 3 percent a year.
Lema said the business would create 25 to 35 jobs in the first year and another 10 to 15 jobs in the second year. She held out the possibility of opening a second laundry in Mount Vernon if business grows.
Board member Thomas Rajala asked for a more detailed analysis of costs and benefits to the city, but IDA Executive Director Margaret Finlayson was not prepared to answer his questions. The board approved the project anyway, so that Regent Hospitality could close on its financing, and it instructed Finlayson to answer the questions in writing by June 28.
Lema depicted the linen service as a safe investment for the city.
The industrial washing machine will be as big as a locomotive, capable of handling 30,000 pounds of sheets, pillow cases, towels and bathmats while operating eight hours a day.
That’s 15 pounds of laundry per room for 2,000 rooms. The company has budgeted annual expenses at nearly $5.9 million. Revenue per hotel room is estimated at $10.49.
That works out to annual revenue of almost $7.7 million, a net profit of more than $1.7 million and a profit margin of 23.1 percent.
“New York had 56 million visitors last year,” she said after the public hearing. “There are 100,000 hotel rooms. They have to have that service.”