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Clayton Harbor Hotel could get a 50% tax break under proposed PILOT

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CLAYTON — Clayton Harbor Hotel would get a 50 percent tax break over 15 years under a preliminary payment-in-lieu-of-taxes agreement.

Assuming the proposed hotel on the old Frink site is assessed at $10 million by town assessors upon its completion, it would pay taxing entities an estimated total of $1,796,121 over 15 years instead of $3,592,242.

Buffalo-based developers Krog Corp. and Hart Hotels plan to get a PILOT agreement in place as soon as possible and break ground on the $22.5 million hotel project once zoning and building permits are issued, hopefully in March, according to local officials.

If all goes as planned, the four-story Clayton Harbor Hotel — which will be built by Krog and operated by Hart Hotels — will be open for business by Memorial Day 2014.

Because PILOT money typically is divvied up based on tax rates, the Thousand Islands Central School District is set to receive the most money and the town of Clayton will receive the least from the deal, despite its past efforts to get the former brownfield site “development-ready” again.

“Standard PILOTs are distributed on the pro-rata of the total tax based on tax rate. The town is the lowest at 7 percent; village at 26 percent, county at 27 percent and the school is the highest at 40 percent,” said Clayton town Supervisor Justin A. Taylor in an email to the Times.

Under the preliminary PILOT proposal, Clayton Harbor Hotel would start out paying only 25 percent of its full taxation and gradually pay more until the rate reaches 75 percent from years 11 through 15, and 100 percent after the agreement expires.

In the hotel’s first year of operation, estimated payments are $25,002 to T.I. Central, $15,940 to Jefferson County, $15,493 to the village and $3,436 to the town.

Over 15 years, the school district would receive $750,055, the county $478,197, the village $464,795 and the town $103,074.

Developers are seeking support from taxing entities for the proposed PILOT, which would ultimately require Jefferson County Industrial Development Agency approval.

The dozen or so town houses the developers proposed to build on the east side of the Frink site are not eligible for a PILOT and will be taxed in full.

Hart Hotels President and CEO David P. Hart has said the partners are aiming for a “four-diamond” rating from AAA for the 105-room hotel that would include a restaurant/lounge, a 275-seat ballroom, business and fitness centers and an indoor pool.

The developers estimate that their hotel would generate on average $1 million in additional revenue for the community through property, sales and occupancy taxes.

Mr. Taylor said this estimate does not include income tax from the employees or the “spinoff revenue” that Clayton Harbor Hotel patrons will spend in the community other than at the hotel — such as at stores, restaurants and gas stations.

Clayton’s Local Development Corp. and the town government, which spent several years cleaning up the 8.4-acre site of an abandoned snowplow factory, sold the waterfront property in December for $2.1 million.

In addition to the construction of a hotel and town houses, Clayton will install more than 50 public transient boat docks at the edge of the property this year to attract more recreational boaters to the village.

The existing Clayton Riverwalk along the property’s waterfront will remain public domain.

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