GLOVERSVILLE – The Gloversville Common Council voted 7-0 Tuesday night to approve a 30-year Payment in Lieu of Taxes (PILOT) agreement with the developer of the $21.1 million, 75-unit, Glove City Lofts artists housing apartment building project proposed for 52 Church St.
The PILOT agreement requires the owners of the Glove City Lofts apartment building to pay $75,000 the first year after the building is built and it receives its certificate of occupancy, the payment amount then increases annually by 2% each year for the remaining 29 years of the agreement.
According to the agreement, the tax revenues will be shared among the city of Gloversville, Fulton County and the Gloversville Enlarged School District, with the split to be based on “the same basis that property taxes would be shared if the property and the project were fully taxed.”
Mayor Vince DeSantis said the initial $75,000 payment is equal to the city property tax bill on a property assessed for approximately $1.5 million.
“That’s an actual tax of about $1,000 per apartment,” DeSantis said.
The PILOT agreement was included in the Common Council’s meeting agenda packet, posted to the city’s website — cityofgloversville.com/wp-content/uploads/10-25-22-agenda.pdf — and available to the public in paper form at the meeting.
The agreement is between the city government, the nonprofit Glove City Lofts Housing Development Fund Company and its president Rosemarie Noonan and the developer of the project Glove City Lofts Limited Partnership and its general partner Sean Kearney.
In May 2021 the Kearney Group announced it had entered into a 12-month purchase option agreement to buy the approximately 3 acre, square shaped lot at 52 Church Street for $200,000 from the Fulton County Center for Regional Growth, which had acquired the property in early 2021 from two “out of town LLCs”, according to CRG President Ron Peters.
In April the Kearney Group fulfilled its purchase contract for the property and is now seeking about $1.1 million worth of federal income-based housing tax credits awarded by New York State office of Homes and Community Renewal (HCR) in order to build Phase 1 of Glove City Lofts, which would be the first of two planned 75-unit apartment buildings.
DeSantis Tuesday night said the PILOT agreement approved by the common council meets the standard requirements of the federal affordable housing tax credit program. He said similar PILOT agreements are in place for the Estee Senior Apartments and the Hotel Kingsborough apartment building, because both of those projects also have income controlled apartment units.
“(Kearney) is applying for those tax credits, and I think the application is due very soon,” DeSantis said. “I think it was late October or early November, so they are ready to put in that application. We’ve been onboard with doing this, from the beginning, and the fact that we passed this will make their application for the tax credits stronger. It will show the city is very much behind this project.”
The Gloversville Planning Board gave site plan approval to the Kearney Group, including an 18-month time extension for that approval rather than the normal 6 months, after several presentations from Ken Kearney, owner of the Kearney Realty Group.
During his presentations in October 2021 Kearney explained that he expects the income-contingent 1-bedroom apartment units for Glove City Lofts to charge approximately $665 in rent per month and the income-contingent 2-bedroom units will charge about $775 per month in rent. He said the ‘middle-income’ units will have higher rents, possibly up to 20% more. He said the federal tax credit program wants none of the renters paying more than 30% of their income toward rent.
Kearney made another presentation during the Mohawk Valley Brownfields Developer Summit at Fulton Montgomery Community College in April where he explained how his company has been able to use a “middle-income” federal affordable housing tax credit program that was created as a result of a 2015 U.S. Supreme Court case called Texas Dept. of Housing and Community Affairs v. Inclusive Communities Project, which found that the low-income federal housing tax credit program was essentially pushing and concentrating poverty into certain areas of communities in the state of Texas, undermine the goals of the federal government’s affordable housing programs.
“The purpose of the middle-income program is to get higher income people into distressed areas of cities,” he said. “And what (the middle-income federal tax credit program does) is set the rents 20% below what a tenant’s income is, when the rule-of-thumb (for renters) is to pay 30% of their income for rent. Here in the middle-income program the renter is only paying 22 to 23% of their income. If the rent was set at 80% (of the area’s median-income under the old affordable housing tax credit) we are now able to set it at 100% (of the area’s median-income), so that gave us a 20% advantage, and what that does is allow us to attract higher-income people to an area that they were not willing to move before.”
According to the PILOT agreement approved by the council, the income controlled apartments can not exceed the maximum tenant rental charges allowed by law for the duration of the 30 year PILOT agreement.
In June the Local Planning Committee for Gloversville’s $10 million Downtown Revitalization Initiative included a $1.3 million request for DRI funding from Glove City Lofts, equal to about 6% of the total project cost. The city will likely learn which projects receive DRI funding by early 2023.
“This is the greatest leveraged project in the DRI, because the total project size is almost 20 times the amount they are asking, none of the other DRI projects come close to that,” DeSantis said.