CLAYTON Jefferson County and other taxing entities Tuesday approved a payment-in-lieu-of-taxes agreement for the proposed Clayton Harbor Hotel that would give the hotel owners a 50 percent tax break over 15 years.
Under the PILOT, taxing jurisdictions the town and village of Clayton, Thousand Islands Central School District and Jefferson County will receive an estimated total of $1,796,121 in revenues over 15 years with the hotel assessment fixed at $10 million.
Buffalo-based developers Krog Corp. and Hart Hotels hope to break ground on the $22.5 million luxury hotel project at the former Frink site, 200 Riverside Drive, in April and open the four-story facility by Memorial Day 2014.
Hart Hotels, which will operate the Clayton Harbor Hotel, hopes to achieve 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.
Tax-abatement agreements help developers lower the risk of failure by gradually raising the tax rate on a property.
In Clayton Harbor Hotels case, the owners will 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.
Payments typically are divided based on tax rates. Because Thousand Islands Central School District has the highest tax rate among the taxing jurisdictions involved, it will benefit the most from the deal.
Over 15 years, the school district would receive $750,055, Jefferson County $478,197, the village of Clayton $464,795 and the town $103,074.
In the hotels 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.
The dozen or so townhouses the developers plan to build on the east side of the Frink site are not eligible for a PILOT and will be taxed in full.
The developers estimate that their hotel will generate nearly $1 million in additional revenue for the community through property, sales and occupancy taxes.
This estimate does not include income tax from the hotels 90 or so employees or the spinoff revenue from the money spent by hotel patrons at local businesses.
Krog has completed several mixed-use development projects in New York communities similar to Clayton, such as the Watkins Glen Harbor Hotel near Seneca Lake that it built through a partnership with Hart Hotels.
The developers have described their 104-room Watkins Glen facility as Clayton Harbor Hotels twin sister.
Claytons Local Development Corp. and the town government spent several years removing contaminated soil from the 8.4-acre site of an abandoned snowplow factory and sold the waterfront Frink property to the hotel developers in December for $2.1 million.
In addition to the construction of a hotel and townhouses, Clayton will install more than 50 public transient boat docks at the edge of the former brownfield site this year to attract more recreational boaters to the village.
The Clayton Riverwalk along the propertys waterfront will remain public domain.