JCIDA considers limiting leasebacks

The Jefferson County Industrial Development Agency may become more strict when determining which businesses can receive sale-leaseback agreements.

The agreements eliminate sales and mortgage recording taxes for project developers.

In a loan review committee meeting last week, committee members discussed the request of Waterberry Lodging Co., Syracuse, for sales tax abatement. The hotel company bought Days Inn, 110 Commerce Park Drive, in September and is renovating it to become a Comfort Inn & Suites.

Committee members expressed mixed feelings about the proposal, which would eliminate $115,000 in sales tax on the $1.6 million renovation. The committee passed it to the full board, which meets Thursday, for a decision.

"If they come back to us in a different form — a loan for the renovation, that's one thing," member Urban C. Hirschey said. "But just looking for tax relief, I'm not sure of that."

Donald C. Alexander, chief executive officer of JCIDA, said he wanted the full board to consider the request because it was a decision that could go either way.

"There has been increased scrutiny in Albany on IDA activity insofar as retail is concerned," he said. "But this project targets tourism, which is allowed, and it's a job-retention question more than anything else."

It isn't clear if without the tax abatement the project would cease, he said.

"There's no threat to move out of New York state," he said.

The threat of leaving the state is another test for IDA intervention.

In May, JCIDA's board rejected a sale-leaseback agreement with Candlewood Suites Hotel on Herrick Road off Route 11 in LeRay. In that case, the hotel was more than half built when developer Hemisphere Management, Rochester, asked for the sales tax relief.

The board asked then that a policy be created to extend sale-leaseback agreements and other economic development inducements to projects only before they are started.

Now, the board may limit sale-leasebacks only to new businesses.

"I would think a bit differently about a new business coming in," Chairman David J. Converse said.

Mr. Alexander said the renovation will make the hotel more competitive, which protects the jobs there. The committee requested information on the number of employees at the hotel and the amount of money to be spent locally on the renovation project.