SCHENECTADY — The city’s Industrial Development Agency will begin negotiating property tax incentives for three major construction projects with a combined budget of nearly $100 million
The decision at Friday’s IDA meeting was expected, and the Payment In Lieu Of Taxes deals that will be struck are an important part of the financing for Phase II of Yates Village, the YWCA’s new building, and a new apartment/retail building in the heart of downtown Schenectady.
Construction of the Yates and YWCA projects is expected to begin next year. The bank building that stood at 501 State St. was demolished earlier this year and construction of the apartment building is projected to start later this year.
The city IDA is managed by the Schenectady County Metroplex Development Authority, which leads most of the public economic development promotion within county borders. Metroplex Chairman Ray Gillen said developers of the three projects are receiving multiple forms of assistance from the IDA beyond PILOTs in bringing their plans to fruition.
The projects are:
- Yates Village Phase II. At a cost of $70 million, the Schenectady Municipal Housing Authority and two private firms will renovate 159 units at the Northside housing complex, build 52 new units, and create recreation space, greenspace and a community center. Phase I, already underway, has a separate PILOT agreement with the IDA.
- YWCA: A New York City real estate firm will renovate the existing YWCA building in the Stockade neighborhood and build a 40,000-square-foot building behind it at a total cost of $18 million.
- 501 State: Redburn Development Partners, headquartered across State Street, will erect a 50,000-square-foot building with 49 apartments and ground-floor retail space where the Citizens Bank previously stood. Projected cost is $10 million, and Redburn previously received assistance from Metroplex in paying for the demolition.
Each of the projects will rely on a multipiece funding package, and the PILOT deals are a key part of that.
Gillen said the projects will be a net gain for the city’s tax revenue: The YWCA and Yates have not generated property tax revenue since their construction in 1926 and 1948, respectively, and the bank building at 501 State generated less than the apartment building will pay.
Gillen said he doesn’t expect the economic impact of COVID-19 to affect negotiations for the PILOTs.
“We’re still seeing strong activity in construction and development. Properties are still holding their value, so I would say no,” there won’t be any pressure for more-generous PILOTs, Gillen said.
“It’s amazing the real estate market hasn’t slowed down that much — stuff is still selling.”
The standard PILOT often negotiated by Metroplex amounts to something in the range of a 50 percent savings for the developer in the first year after construction. The savings is reduced by 5 percentage points in each successive year, until the full tax bill is due after the 10th year.
Gillen said the PILOT for 501 State is likely to follow that model but the PILOT for Yates and the YWCA may be different because both have been tax-exempt for so long.