AMSTERDAM -- Developers of the proposed $34 million Chalmers Mill Lofts apartment building project are set to submit their application for federal tax credits and gap loan funding from the state Division of Housing and Community Renewal on Wednesday.
Bill Teator of DEW Ventures, which has partnered with KCG Development for the project, said the company hopes to be approved for approximately $18 million worth of federal low-income housing tax credits, and about $7 million in "gap funding" loans from New York state. He said those funding sources plus about $3 million in private equity as well as another conventional mortgage will pay to build the 120-unit apartment building and banquet hall.
But the income-tax credits and state-backed gap loans come with strings attached. Most of the units at the apartment building will have rents set by the median income levels of people in the local market for the building, restricting the amount of money the developers can make. Teator said the federal tax credits require 30-year rent restrictions for the units and the state loans are longer, requiring up to 50-year restrictions.
"The ability to leverage this kind of capital into a market like Amsterdam, you just couldn't do with conventional funding at this scale yet. The market rates just aren't there. That's the rate we're essentially going to start at," Teator said.
To offset the income restrictions for the apartment building, the developers are asking for a 30-year Payment in Lieu of Taxes agreement from the Montgomery County Industrial Development Agency. The PILOT would affect the taxing jurisdictions of the city of Amsterdam, the Greater Amsterdam School District and Montgomery County.
Some of the terms of the 30-year PILOT were presented to the Amsterdam Common Council at a special meeting held Dec. 10.
The purpose of the meeting was for the council to vote to dispose of the city's fleet of buses by giving them to other municipalities. Amsterdam eliminated its Transportation Department on May 1.
After voting on those resolutions, members of the council were asked to sign a letter to RuthAnne Visnauskas, commissioner of the state Division of Housing and Community Renewal, supporting the application of KCG Development and DEW Ventures for New York state low-income housing tax credits. Part of the letter states the project, to be built on the south side of Amsterdam at the site of the former Chalmers Knitting Mill, is applying for a 30-year PILOT agreement that would pay the three taxing jurisdictions a combined $2.97 million over the course of the PILOT.
Ultimately, all five members of the Common Council signed the letter supporting the project's application for the tax credits, but two council members initially declined wanting more information, 4th Ward Alderman Dave Dybas and 3rd Ward Alderwoman Irene Collins.
"I don't sign anything until I've done my due diligence, and I know what I'm signing," Dybas said.
Deputy Mayor James Martuscello, who represents the 5th Ward, said he signed the letter, but he's skeptical of the PILOT.
"We all support the project, but a 30-year PILOT? That's ridiculous," Martuscello said.
Dybas said on Tuesday that he met with Montgomery County Economic Development Director Ken Rose and went over the details of the proposed PILOT. Dybas said the PILOT collects $30,655 in the first year, split with about 44 percent going to the school district and the rest split between the city and county, and then increases to $59,963 in the second year. It would subsequently increase gradually every year until ending at approximately $149,912 at the end of the 30-year deal.
Teator said the PILOT payment schedule is based on the estimated income generated by the building. He said the building expects to get 90 percent of its income from tenants and 10 percent of it from the commercial income of lease payments from Lanzi's Southside restaurant and banquet hall.
Teator said if median income levels in the region rise, the rent rates on the rent-controlled units will also rise, allowing for more income to the building and larger tax payments. Tax rates for the three governmental entitiies can, and likely will, rise, also resulting in higher payments.
Dybas said he believes the city could have gotten a better deal than the 30-year PILOT, but he will ultimately support it because it is legal and probably necessary for the company to build the project. He said the agreement includes "claw back" provisions that will enable tax benefits to be taken back if the developer does not meet the benchmarks outlined in the project prospective.
"All they are doing is taking advantage of everything that they possibly can. Everything hangs together, everybody has done everything they can to make the case. We're taking a chance, but the information that is being given to [officials], I can't poke holes in it. It appears to be a sound proposal, given the information presented to me," Dybas said.
Collins said she met with KCG Development officials, who outlined some of the changes the company has made to the proposal, based in part on community feedback. Some of the changes include:
• The number of proposed apartment units is dropping from 130 to 120, and 26 to 31 of the units will have "market based" rent that will float according to what the market will bear, starting at $975 per month for a one-bedroom and $1,125 per month for a two-bedroom.
• There will be more single bedroom units, 49. There will be 71 two-bedroom units.
• A prominent top-floor resident-only lounge with outdoor access and views that overlook the river and the Mohawk Valley Gateway Overlook Pedestrian bridge, the boardwalk, and surrounding hills to have resident only porch access.
• A civic boardwalk parallel to the Mohawk River with gas and electric hook-up for fire pits and other uses.
• The company has engaged the LA Group to help design the landscaping and civic waterfront area to integrate the aesthetic of the MVGO and create the appropriate spaces to allow for civic activities.
• The project will not include laundry hookups at each apartment, but each apartment floor will have a community laundry room.
After looking at the details, Collins said she decided to sign the letter.
"The project is a good project. We have to start somewhere. When was the last time someone was willing to invest $30 million in the city?" Collins said. "I'm very excited about the new energy coming into the city; we need it. Anytime you start something new, there's always going to be grumbles, 'why this and why that', but we have to start somewhere, and this is a place to start."
Collins, Martuscello and Dybas agreed the Common Council will likely vote on the proposed PILOT at one of their meetings before the Jan. 10 meeting of the Montgomery County IDA.
Montgomery County Economic Development Director Ken Rose said the county IDA will wait until each of the taxing jurisdictions affected by the PILOT passes resolutions supporting it before taking action. Rose said the 30-year PILOT structure for large-scale housing projects exists as an incentive to help stimulate private investment to support new affordable housing.