July 28, 2020
KINGSTON, N.Y. — The Common Council’s Finance and Audit Committee has endorsed the requested $30.64 million in tax breaks for the planned residential/commercial development known as The Kingstonian.
The committee voted 3-1 on Tuesday in favor of the payment-in-lieu-of-taxes, or PILOT, deal after a representative for the developers of the Uptown Kingston project emphasized public parking will be included.
“The parking garage created the need for the PILOT agreement, but you have to consider the entire project when making the decision,” the project’s general contractor, Joseph Bonura, told the finance committee. “This project is going to generate direct sales tax, which is going to put money back in the city of Kingston’s coffers.”
The project — proposed by Kingstonian Development LLC and JM Development Group LLC — has an estimated construction cost of $57.9 million and is to include 143 apartments, of which 129 would be rented at market rates. Also proposed are 9,000 square feet of restaurant and retail space, a 32-room boutique hotel, a pedestrian plaza, a foot bridge crossing Schwenk Drive between the new development and Kingston Plaza, and 420 parking spaces, of which about 280 would be for public use.
The project would straddle Fair Street Extension, between North Front Street and Schwenk Drive, and would be partly on property owned by Herzog’s Supply Co., whose president is the principal of Kingstonian Development LLC.
Under an application with the Ulster County Industrial Development Agency (IDA), the developers are seeking to have $28.84 million in property taxes waived over 25 years and also receive exemptions for an additional $1.8 million in mortgage, sales and use taxes.
The resolution approved Tuesday goes to the full Kingston Common Council on Tuesday, Aug. 4. If the council supports the tax deal, the matter would come before the IDA board on Wednesday, Aug. 12.
On Tuesday, Aldermen Douglas Koop, D-Ward 2, Reynolds Scott-Childress, D-Ward 3, and Tony Davis, D-Ward 6, voted in favor of the tax deal. Alderwoman Michele Hirsch, D-Ward 9, was opposed. Alderman Steven Schabot, D-Ward 8, abstained because he is employed by Herzog’s.
“We need this,” Davis said. “We need mixed housing units. We need appropriate commercial retail space. We need public parking.”
The developers say having a public parking area as part of The Kingstonian would be equivalent to paying $30.9 million in taxes over a 25-year period because they would not derive benefits but still have maintenance costs.
Scott-Childress agreed. “They are taking a huge risk here,” he said.
Hirsch called the proposal “a really positive project for Uptown” but expressed reservations about giving it tax breaks.
“We need housing in our city, we need parking Uptown, I understand all that. But I’m just really concerned that the public benefit is still … not as tangible compared to the loss of sales tax revenue and mortgage tax revenue,” Hirsch said. “And we really need a tax base right now, and I’m just not comfortable moving forward without just a little more work on the PILOT.”
Members of the IDA board also expressed reservations when they discussed the requested tax relief earlier this month. They noted, among other things, that the market-rate apartments at The Kingstonian would rent for $1,550 to $2,850 per month. Even if all those apartments were rented at the lower price, the gross revenue from them for one year would be $2.4 million.
Board member Diane Eynon objected to acting on tax breaks for the project during the COVID-19 pandemic, which has put considerable stress on municipal budgets that rely largely on property taxes for revenue.
Enyon noted Ulster County stands to have a budget deficit in the tens of millions of dollars because of the pandemic and resulting economic weakness.
She also said she was concerned about the “optics” of granting tax breaks for a project like The Kingstonian amid high local rates of both poverty and unemployment.