Sometimes deviation from the norm is a good thing, but sometimes it can prove worrisome. That is why the Partition Street Project, known as Diamond Mills, in Saugerties village will utilize a standard PILOT agreement instead of a “deviated PILOT” sought by village officials.
The Saugerties Village Board unanimously approved Nov. 8 a “deviated” payment-in-lieu-of-taxes agreement for the Partition Street Project that would have stretched a typical 10-year agreement over 20 years with modified terms. But the deal needed approval from the Saugerties Board of Education and the Ulster County Industrial Development Agency and on Nov. 15, the Board of Education voted against the plan.
School board officials said concern centered on potential financial ramifications, saying they were given no specific information how much tax revenue the district would receive under the deviated PILOT.
Three days later, the Ulster County Development Agency approved a standard PILOT agreement for the project so it would receive low-interest funding and a 10-year PILOT, agreement.
Diamond Mills broke ground in June and hopes to open next Labor Day. The three-story, 30-room boutique hotel with a 400-seat catering hall, a 100-seat restaurant and 215 parking spaces on 7.8 acres near the center of the village is estimated to cost between $10 million and $12 million.
“This is a standard set of incentives to help make the project happen,” said Lance Matteson, CEO of the Industrial Development Agency and president of the Ulster County Economic Development Corp., after the IDA vote Nov. 18.
Under the deal, the project will be exempt from property taxes on improvements made on the land for the first three years. Thereafter, the project will be exempt from 75 percent of the taxes on the improvements for the fourth and fifth years of the agreement, and then 50 percent exempt for the final five years. After the 10 years is finished, the project will be fully taxed based on its assessment.
Also approved by the IDA was access to $8.8 million in low-interest bonds to help fund the project, which has a total estimated cost of $12 million, Matteson said. He said the money for the bonds would be loaned to the developers, Partition Street Project L.L.C., through M&T Bank. Matteson said the bonds would be exempt from federal taxes for the bank, thereby allowing M&T to offer the financing at a lower interest rate to the developer. The deal was made possible as part of the IDA”™s Recovery Zone Facilities Bond allocation, he said. The property owners will continue to be liable for property taxes currently paid on the unimproved land.
