PITTSFIELD — Plans to build a 77-room Holiday Inn Express on South Street are viable again after a unanimous city council vote on Tuesday night to extend the term of a tax increase funding agreement between the city and the owners.
The owners say that although construction and financing for the project have been delayed during the pandemic, they believe they can innovate at 1055 South St. this spring and open the new hotel by May 2023.
The hotel, whose construction is now estimated at $12 million, is expected to create between 25 and 30 jobs, including 15 full-time.
Council voted to extend an existing six-year tax agreement with Somnath LLC, the company that owns the lot at 1055 South St., and operated by Pittsfield hotel family, The Desais. The Desais also own the Best Western Plus on West Housatonic Street.
Councilors have agreed to continue the tax increment financing arrangement, known as TIF, through fiscal 2028 in light of the impact of the pandemic on the project.
“Over the past two years the hospitality industry has taken a hit and banks are not funding new hotel projects,” Michael Coakley, Pittsfield’s business development manager, told the council at the meeting.
“For two years, there has been no construction, no investment in this property.”
The TIF allows Somnath LLC to continue paying at the current tax rate – approximately $15,000 – for the next two years as the hotel is built. During the last four years of the agreement, Somnath LLC increases the percentage of taxes it pays on the increase in property value.
The deal is expected to save the company approximately $755,000 in property taxes over eight years. When the hotel is complete, the property value of the lot is expected to be around $6 million.
“I think business in Pittsfield is really important and I support that, but I just have to add that we’re giving tax breaks to businesses and taxing our residents,” General Counsel Karen Kalinowsky said before voting in favor of the agreement. .
Former community development director Deanna Ruffer said the deal was not a tax break, but the city was “removing some of the future taxes it would pay once the development is done to allow it to have access to money in the early years to facilitate development”.
The Tyer administration has been hinting at the project’s revitalization since January, when the mayor called the project a potential cornerstone for development this year in his state of the city address.