Kingstonian developers seek tax relief
Members of the Ulster County Industrial Development Agency board appear cool to the sizable request.
The developers of the proposed residential and commercial project known as The Kingstonian are seeking $30.6 million in tax relief, but they did not get a sympathetic ear Wednesday from the Ulster County Industrial Development Agency (IDA) board.
Kingstonian Development LLC and JM Development Group LLC said they are basing the amount of requested tax relief on their plan to provide public parking as part of the project, which would be built at North Front Street and Fair Street Extension in Uptown Kingston.
“If there was no parking structure as a part of this project, we wouldn’t need a PILOT (payment-in-lieu-oftaxes) agreement,” said Joseph Bonura Jr., of JM Development. “The housing would be able to pay its own taxes at full assessment.
“But because we’re building a 420-slot parking garage, at a cost of almost $17 million, and we’ll lose money from the day it’s built until the day this project doesn’t exist anymore, hopefully 100 years from now,” Bonura said. “That parking garage is a drag on the economics of the project.”
The project, currently expected to cost $57.9 million, is to include 143 apartments, of which 129 would be rented at market rates. In addition to the apartments, the project is to comprise 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 130 would be reserved for the residents.
Part of the project site is owned by Herzog’s (whose president is the principal of Kingstonian Development LLC), while the rest, where the Uptown parking garage used to stand,
is owned by the city. That site currently is a municipal parking lot.
In the application for tax relief, the developers say there would be about $912,500 paid on the Herzog’s property over 25 years if there were no project and about $29.9 million with The Kingstonian built but no tax deal.
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 25year period because they would not derive benefits but still have maintenance costs.
The PILOT application also seeks exemptions from $1.5 million in sales and use taxes and about $325,600 in mortgage taxes.
In voicing reservations about granting tax relief, members of the IDA board noted the marketrate apartments 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.
The IDA board agreed to return the tax relief request to the agency’s screening committee, though the developers indicated they might go directly to city of Kingston and Kingston school district officials to ask for breaks.