Pittsfield Finance Committee OKs Hotel Project Tax Incentive
PITTSFIELD, Mass. — The City Council subcommittee on Finance approved a tax financing incentive to aid in the construction of a new hotel but asked that delays caused by COVID-19 be considered.
The subcommittee voted Thursday to recommend the TIF agreement to the full council but also asked that the mayor work with the applicant to allow some flexibility in the time frame given the novel coronavirus pandemic that could cause delays in construction.
"I hope you could put a shovel in the ground in May of 2020 but I don't want to lose a project," committee member and Council President Peter Marchetti said. "I wouldn't want to be so rigid to force the doom of a project that seems to be a positive thing for Pittsfield."
Somnath LLC plans to build a 77-room Holiday Inn Express at 1055 South St. Owners Mauer and Dilip Desai operate other hotels in the area.
Mauer said they operated a Comfort Inn at the location until demolishing the 16-year-old hotel in 2014.
"The Comfort Inn was my dad's first construction project in 1998 and he really put everything on the line," Mauer said. "I was 10 years old when he built that ... it was all his cash capital because he had a hard time getting a loan so it was built conservatively."
He said the hotel served them well but it needed to be updated and they planned to build a new hotel then but financially it was too risky at the time.
Now they want to invest $10 million in a new hotel and create 25 to 30 jobs,15 of which will be full time.
The five-year TIF agreement will work similarly to past agreements with 100 percent of the incremental increase in real estate property taxes forgiven in the first year, decreasing by 20 percent a year over the five-year term.
Mauer said hospitality has taken a hit in Pittsfield with South County absorbing much of the traffic. He said they want to build it back up here and be able to attract tourists who may have a destination elsewhere.
The two felt even if someone was attending an event in Lenox or North Adams, they could stay in Pittsfield, which would benefit the city's lodging tax revenues and the local economy.
"We want to grow the Berkshires and especially Pittsfield," Dilip said.
Mauer said the new hotel would have more suites than standard rooms as well as a ballroom for event space.
Optimally, he said, they would like to break ground in May or at the very least June. He said construction would take about a year so would have to begin in the spring if they want to catch the summer season.
"In the Berkshires, a project has to be ready for the following summer," Mauer said. "If you don't catch that summer you will have a tough time surviving. That summer revenue is really what folds you through the winter."
But with COVID-19 essentially closing down the country, Mauer said even June at this point may be ambitious. He said before the outbreak, they were in communication with multiple lenders. Now banks aren't talking to any hotels.
"We don't see ourselves at the moment really sitting down and talking to a bank ... we will see what happens in a few weeks," he said. "I have been optimistic about this from day one and I am hoping when the economy opens back up people are going to want to get out and spend but right now we can't really even pick up a call to talk with a banker."
Mauer said if they miss the spring, they would likely have to delay the project a year. He said even if they are delayed this is a project they want to see to completion.
"We want to do this that piece of property is where I grew up...I was raised there and played in those woods," he said. "I tore that property down with the intention of putting something up that will last and I don't want to tear it down again in my lifetime."
The subcommittee members said they would like to be able to afford the Desais some flexibility and if need be, delay the agreement a year or extend the deadlines to a six-year period instead of a five.
Community Development Director Deanna Ruffer said this is possible but would be at the mayor's discretion.
The subcommittee voted to recommend the agreement to the full council but also asked that the mayor work with the applicant and give additional consideration because of the pandemic.
Tags: Finance Committee, motels, hotels, tax incentive,
