Sometimes deviation from the norm is a good thing. The village of Saugerties thinks this is one of those times.
The Village Board unanimously approved a “deviated” payment-in-lieu-of-taxes (PILOT) agreement Nov. 8 for the Partition Street Project, but the deal will not be final until other involved taxing entities and the Ulster County Industrial Development Agency sign off on it. Officials say it”™s a win for taxpayers and the developer.
The project, also known as Diamond Mills, had its groundbreaking this past June and should be open by 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.
Developer Thomas Struzzieri, who also is president of Horse Shows in the Sun and John Mullen of J. Mullen and Sons Construction Co Inc. are the primary partners.
The project is eligible for a PILOT agreement through the Ulster IDA. Under a standard PILOT agreement, taxes are not paid for the first three years after a development is done, the property is assessed at 25 percent of its actual value in years four and five and at 50 percent of its value for the remaining five years of the 10-year deal.
But Saugerties approached the developers about crafting a so-called “deviated” agreement, Village Attorney Alex Betke said. The new PILOT would be a 20-year deal in which the project owners would pay $100,000 in taxes each year. Of that total, $26,767.18 would be paid to the village, $6,507.18 would go to the town, $15,180.89 would go to the county and $51,544.75 would go to the Saugerties Central School District, Betke said.
The result would be the village receiving an extra $163,000 in tax revenue during the first 10 years and having a steady revenue source during the second half of the agreement, he said. Generally, once a PILOT agreement expires, the property owners come to the taxing entities to either grieve their assessments or try to get a new deal, he said.
“It”™s more money up front for the taxing entities,” Mayor William Murphy said. He said the village felt it needed to see revenue from the project from the first year it was built.
For the deviated PILOT go into effect, though, the Saugerties Town Board, the Saugerties Central School District, Ulster County and the IDA board also must approve the deal. Those agencies are considering the matter at upcoming meetings.
The IDA is also considering whether the project is eligible for a tax break on construction materials and a low-interest IDA loan, said board chairman David O”™Halloran. The IDA meets Nov. 18.
