The city is considering a 30-year tax abatement agreement to allow the hotel and conference center project in South Paterson close to the St. Joseph’s Regional Medical Center to move forward with construction in July.
The proposed agreement between the developer, Hamilton Plaza Urban Renewal, and the city states the municipality will receive 10-percent of the hotel’s gross revenue for the first 15 years, which amounts to an average of $666,000 per year, according to city records.
In years 16 through 21 of the agreement the city will receive either the 10-percent of gross revenue or 20-percent of the taxes on the property whichever is greater. In years 22 through 27 the city will receive 10-percent of gross revenue or 40-percent of taxes. In years 28 through 29 the city will either receive the revenue percentage or 60-percent of the taxes.
In the final year of the agreement, the city will receive either the 10-percent of the revenue share or 80-percent of taxes, according to the agreement. The progressive increase in the percentages allows the developer to begin paying full taxes after the payment in lieu of taxes (PILOT) agreement ends in 2047.
The agreement is structured to ease the property into full taxation by the end of the 30 years, said Jean Cipriani, city’s redevelopment counsel. She said often the recipients of tax abatements have the sudden realization in the last years about paying full taxes. “This pilot is structure so that should not occur,” she said. “They should get used to paying full taxes.”
The revenue amount increases though the percentage remains the same as the project succeeds, said Thomas Banker, consultant for the developer Frank Brady, chairman of the Medical Missions for Children, which is building the 14-story hotel and conference center.
“The city will benefit from the larger number,” said Banker.
The assessed value of the property and the improvements are estimated to be $62.4 million. If the property paid full taxes at the 4-percent tax rate it would pay $2.4 million, according to estimates. At present the land where the project will be built is producing $0 in tax revenue.
Without the pilot agreement it is unlikely the hotel and conference center will be built, according city officials and the developer’s team.
“This is beneficial to the city,” said mayor Jose “Joey” Torres on Tuesday night as the city’s and Brady’s teams pitched the tax abatement and the redevelopment agreements to the city council.
The project will create 490 construction and 257 permanent full-time jobs, according to officials. “There’s a first choice process. They will have to seek Paterson residents first,” said Banker.
The mayor said he expects to break ground on the project in July of this year. After the 300,000-square-foot project is completed it will have 145 rooms, 11 conference rooms, a grand ballroom, a 420 seat restaurant, and a sky terrace with a view of both Manhattan and the Garret Mountain.
The project also includes a 189 space parking garage under the building.
The hour and thirty-minute presentation was well received by council members.
Michael Jackson, 1st Ward councilman, said he would like to see residents in high ranking positions at the hotel. He said he does not want city residents to just obtain menial jobs at the hotel being called the Hamiltonian in honor of Paterson’s founder.
At-large councilwoman Maritza Davila said she wants to ensure the jobs are posted in places where city residents would see and apply for the positions.
Torres said a job fair will do well to get the message out to local job seekers.
Andre Sayegh, 6th Ward councilman, said the hotel will allow the city to assess a hotel tax which could bring more revenue to the city. “We can imagine how much of a boon that would be,” said Sayegh.
Brady is hoping the council will approve both agreements by June 8th, 2016 for the $129 million project. The project has been approved by the planning board and financing has been secured. The project received $105.5 million in Urban Transit Hub Tax Credit Program tax credit from the New Jersey Economic Development Authority (EDA) in late 2013.
The expected opening for the hotel is October 2018, according to officials.
This report was last updated May 18th, 2016 at 2 p.m.