The Schenectady City Council approved a decrease in Galesi Group’s total assessment for 401 State St. from $2.89 million to $2.3 million, lowering the taxes on the building.
The council agreed to a tax certiorari after Galesi’s payment in lieu of taxes agreement for the 21,283-square-foot building expired in 2013. The developer’s last tax payment as part of the PILOT agreement was $64,190.
With the reassessment of the two-story office building across from Bow Tie Cinemas, tax payments to the city, county and school district will total $99,549 annually.
That’s $25,612 less than what the tax payments would have totaled with the $2.89 million assessment. But tax payments will increase by $35,359 a year compared with the PILOT agreement.
The old Woolworth’s building used to house the state Commission on Quality Care and is now occupied by the state Justice Center for the Protection of People with Special Needs.
“Based on the tenant, and how much they are paying and an outside appraisal, the tax assessment was a compromise,” said David Buicko, Galesi Group’s chief operating officer. “We still agreed to pay more than what it’s worth.”
Buicko said the building was originally assessed at about $1.2 million in 2008. Based on an outside appraisal, he said he wanted to see a $2 million reassessment, down from $2.89 million in 2014.
“I don’t want to fight with the city,” he said. “It is a little over-assessed, but instead we agreed to the settlement of $2.3 million. The tenant pays the taxes so the tenant has to pay our market value.”
The PILOT for the property ran from 2009 to 2013, according to Ray Gillen, chairman of the Schenectady County Metroplex Development Authority.
The agreement was increased from $42,350 in 2009 to $64,190 in 2013, Gillen said. Galesi received a $60,000 grant in 2008 from Metroplex to reconstruct the facade of the building. The project had a more than $200,000 total price tag.
“This was one of the first buildings redeveloped downtown,” Gillen said. “Galesi bought it when Schenectady was just starting its recovery.”
Galesi purchased the property for $300,000 in 1998, before downtown’s resurgence.
Councilman Vince Riggi said during the City Council meeting Monday evening that he agrees with the dropped assessment, a number he said was recommended by city Assessor Molly MacElroy.
“I’m not one to argue with the assessor’s office,” Riggi said. “We’re all on the same page here.”
Riggi stressed that the city should be considering a reassessment on all properties.
“In my opinion, assessment has nothing to do with PILOTs,” Riggi said. “Every building in the city has to be reassessed. We should be granting everybody relief.”
Galesi Group owns several properties downtown, including Center City and Bow Tie Cinemas.
“If you compare what this building is assessed at compared to the rest of downtown, this is a very fair agreement,” Buicko said.
According to county property records, Center City — at nearly 70,000 square feet — was assessed at about $15 million in 2014. Bow Tie Cinemas, a total of nearly 28,000 square feet, is assessed at $7.5 million.
Both are under PILOT agreements — $300,739 a year for Center City and $90,939 for Bow Tie.
Galesi also owns nearby 409 State St. and 411 State St. The former, with 13,260 square feet, is assessed at $1.49 million, and the latter, with 11,119 square feet, is assessed at $2.2 million.
Both are also under PILOT agreements — $33,157 for 409 State St., the Metropolitan Lofts, and $24,849 for 411 State St.
Galesi is behind the planned $480 million revitalization of the 60-acre Alco site between Erie Boulevard and the Mohawk River. Development will include a casino, hotels, housing and office and retail space.
The developer currently pays $40,000 a year under a PILOT agreement for the vacant property. The PILOT was just extended in February. Last year the site was assessed at $2.5 million.
Gillen in February said that once construction begins at the site, each new building would be added to the tax rolls at its full value.