When the Hudson Industrial Development Agency (IDA) met on Tuesday, they were presented with the analysis of the costs and benefits of granting a PILOT to the boutique hotel proposed for 620 Union Street. The entire report can be viewed here. The PowerPoint summary of the report presented during the IDA meeting on Tuesday can be viewed here.
The project is requesting a PILOT (payment in lieu of taxes) agreement that will go on for eleven years. In the proposed agreement, the hotel would pay the current property tax on the building, which is $41,564 a year, for the first three years. In Year 4, the amount would increase to $49,877; in Year 6, it would increase to $58,190; in Year 8, it would increase to $66,503; in Year 10 it would be $74,816; in Year 11, it would be $83,129. After that, the taxes would be based on whatever the assessment on the property is, just like any other commercial building in the city.
The following screen from the PowerPoint presented at the IDA meeting on Tuesday shows that although the City of Hudson and the Hudson City School District will forgo $343,572 of revenue if the PILOT is granted, during the eleven years of the PILOT, the city and the school district will realize more than $2.1 million in lodging tax, sales tax, parking revenues, and PILOT payments if the hotel project is built--the largest amount being the $1.3 million in lodging tax.
The screen below, also from the PowerPoint, shows that the cost to the City of Hudson, in forgone property taxes, will be $168,950 if the PILOT agreement is approved, but the benefits to the City if the proposed hotel is built will be $2,025,345. This can be seen as getting $11.99 for every dollar forfeited.
The hotel project so far has gotten conceptual approval from the Historic Preservation Commission and site plan approval from the Planning Board. The IDA will hold a public hearing on the proposed PILOT agreement on Wednesday, September 16, at 1:00 p.m. The link for joining the meeting is on the City of Hudson website. Scroll down to the calendar.
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This hotel idea and the "benefit/cost"discussion seems odd. The claim is that the hotel will generate all this revenue for the city, but how? The numbers seem rather inflated. The parking revenue of 86K, over 11 years that averages to $7800/year, per room (50) is $156+. The City doesn't charge that much for a parking permit (I checked), so where is this number coming from? The lodging tax is 4% if I'm not mistaken. The average over 11 years for the hotel is $118K, which means the hotel will be generating 2.95M in annual sales? Which also assumes 100% full occupancy - year round? I talked to a friend who works in lodging and they have never had 100% occupancy - ever. Pretty Powerpoint presentations have conned many people over the years with colorful charts, impressive graphs and fantastical numbers. Looks like this one has done it again!
ReplyDeleteI wondered about the parking number myself. How did they figure that? A lot of people come by train. And if it's calculated on full occupancy, that's a stretch. Also municipal lots (one nearby are free on Saturday and Sunday.
ReplyDeleteThe municipal parking passes are $250 a year. You can find that information on the City of Hudson website. http://www.cityofhudson.org/departments/parking_bureau/index.php#Permits In the Planning Board review, the hotel agreed to buy 30 of them for hotel guests. That's $7,500 a year. For eleven years, that's $82,500. I'm not sure where the extra $3,775 came from. Maybe they anticipated a fee increase in eleven years or they were factoring in anticipated revenues from meter parking by hotel guests and patrons of the restaurant, but the number presented is not out of line.
DeleteThanks for the info CO, but if there's that kind of an error in the parking number there are most likely other errors. The lodging tax numbers are completely out of line from what I can tell. You've been here long enough. Honestly, have you ever known any lodging business occupied 100% mid-week in the winter?
Deletelets see -- 50 rooms at an occupancy of 100 nights is 5000 nights for the hotel per year. that is less than 1/3 occupancy -- 2/3 occupancy is 10,000 nights. what are the room rates? we will see. that generates lodging taxes. Only.
ReplyDeleteThe hotel clients make the difference. What Hudson's bars, restaurants, and stores need are customers who spend money to support real businesses. these people have to pay sales taxes on all their purchases. the sales tax rate is currently 8%. that money goes to the state, the county, and the city.
I think the new people here in Hudson do not approve of businesses and generating money to pay for services. They think it just falls from the State's huge coffers to bail out the City. the State is in almost as bad shape as the City.
the reality is that the money comes from sales taxes, lodging taxes, and real estate taxes.
as you all know, the real estate taxes in hudson are very very high, and will be going much higher. the City has a 1 to 2 million dollar deficit.
everyone in Hudson has alot of feelings, but the feelings don't pay the bills.
being broke and bankrupt does not feel very good but that may be where Hudson is going.
no one in hudson has any sense of handling a budget or money.
and as a further note, the State of New York has a State Hotel Sales Tax of 4%, and Hudson has its own lodging tax, just like New York City. i would say maybe Hudson needs the revenue.
ReplyDelete