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Hotel owners try to make economic case against tax breaks for Holiday Inn Express

By Howard B. Owens

If Steve Hyde said it once, he said it at least a half-dozen times Tuesday during a public hearing on providing tax incentives for a proposed Holiday Inn Express in Batavia: The Genesee County Economic Development Center wants the input of other hotel owners on the potential economic impact of the proposed project.

"We are most interested in your views on what’s going on in the marketplace so we can share that with the board and they can give it thoughtful consideration," said Hyde, CEO of the GCEDC, near the end of a sometimes slightly contentious public hearing.

About a dozen local hotel operators attended the 4 p.m. meeting.

Typicall at such hearings, members of the public speak, officials listen with little or no response and the meeting ends. But Hyde repeatedly engaged speakers, either with questions or by challenging them to deliver more facts.

"If you have additional facts from validated sources that can justify your position, you should present that to us," Hyde said. "We hear you loud and clear but we need you  to provide us with verified facts."

The meeting opened with Mark Masse, VP of operations for GCEDC, presenting an overview of the proposed project and the proposed tax incentives the GCEDC can help deliver.

The developer is Michael Patel and an investment group, Chase Hotel Group, which operates in four states and eight markets. Previously, Patel owned and developed Comfort Inn in Batavia and he currently owns Hampton Inn in Batavia.

The proposed hotel would have 80 rooms and cost $3.5 million to develop.

When completed, the hotel will employ 19 full-time equivalent staff members.

Under the tax abatement proposal, Patel and Chase Hotel Group would receive $112,000 in sales tax exemption, a mortgage tax exemption of $37,500 and a property tax abatement over 10 years of $400,136.

These are taxes, according to Masse, that won't be generated if the project isn't built. 

There will be no tax reduction -- meaning no abatement of existing taxes -- for existing tax liabilities on the property.

If the project is built, it should generate more than $800,000 in sales tax over 10 years and $38,700 over 10 years in fire district fees.

The total economic benefit to the community over 10 years is estimated at more than $8.5 million.

Local hotel owners took issue with these numbers saying the figures don't account for lost business, not to mention the potential closure, of existing hotels.

"You say after the Hampton Inn opened there was an occupancy increase," said Chan Patel, owner of the Clarion Inn on Park Road (formerly the Holiday Inn). "I can prove to you that over the next two years, my occupancy went down by 10 percent."

The operators who spoke said they've all seen occupancy rates drop as new hotels have come into the market and they don't see how a market with a 48-percent occupancy rate in market with 1,000 rooms will benefit by adding 80 more rooms.

Jayesh Patel, owner of Travel Lodge, Batavia, argued, as did other hotel owners, that more rooms will mean that all of the hotels will wind up charging lower rates. The Holiday Inn Express, he said, with the benefit of tax breaks, would then have an advantage over established hotel owners who are paying all of their taxes.

"If the developer has faith in the market then they should spend money out of their own pockets rather than out of taxpayer pockets," Jayesh Patel said.

Rashi Dev, owner of the Comfort Inn, said if Michael Patel believes there is such a need for more hotel rooms in Batavia, why is he charging rates at his other property, the Hampton Inn, that are as low or lower than similarly priced hotels in the area.

"The Hampton Inn should have rates $5 or $10 (per night) higher than us," Dev said. "If he's so confident in the market, why does he need to decrease his rate?"

There were no GCEDC board members present at the meeting. GCEDC staff will present the feedback from the public hearing to the board prior to the board voting on the proposal at its March 3 meeting.

Hyde said any factual information hotel owners can provide at least two weeks prior to the March 3 meeting will also be presented to the board and that hotel owners will be given a chance to speak at the March 3 meeting.

Today, Town of Batavia also announced a public hearing on the project with the town's planning board at 7:30 p.m., Feb. 15.

Top photo: Steve Hyde; inset, Chan Patel; bottom, Mark Masse opening the meeting.

Bob Harker

"Under the tax abatement proposal, Patel and Chase Hotel Group would receive $112,000 in sales tax exemption, a mortgage tax exemption of $37,500 and a property tax abatement over 10 years of $400,136.

These are taxes, according to Masse, that won't be generated if the project isn't built."

What?????

Feb 1, 2011, 9:30pm Permalink
Howard B. Owens

If the project is built, these are taxes that the owner might be expected to pay.

If it isn't build, the agencies due the taxes would never see that revenue.

In other words, if the project isn't built, it's not like the agencies that collect the taxes will be losing anything.

If it is built without the abatement, then the agencies would realize some $400,000 in additional revenue.

There's no increase in tax revenue if it is not built; if it is built, and abatement given, then the value of the abatement would be about $400K, but that $400K could never even be a possibility if it is never built.

Feb 1, 2011, 9:58pm Permalink
Howard B. Owens

The handout reads:

Local sales tax increase (10 years): $825,000
PILOT Payments (10 years): $107,841
Fire District Fee (10 years: $38,720
Total tax revenue increase: $971,561 vs $549,636 tax avoidance

Feb 1, 2011, 10:15pm Permalink
Kevin Squire

Maybe the speakers at the meeting would have been able to give "verified" facts if they had been provided and informational packet prior to this meeting. I believe in a previous post it was stated that no more updated information was available on this situation other than what had been presented at the previous meeting. I have alot of faith in our community to digest the facts and come up with their own take on this information.

Feb 1, 2011, 11:06pm Permalink
JoAnne Rock

Good point Kevin. Mr. Hyde demands verifiable facts from those opposed to his project, yet expects everyone to accept his agencies assumptions as facts.

Are there facts and validated sources to back up their assumption that "the total economic benefit to the community over ten years is estimated at more than $8.5 million"?

Howard posted:
In other words, if the project isn't built, it's not like the agencies that collect the taxes will be losing anything.

Is that your take, or was that conveyed at the meeting?

Feb 1, 2011, 11:21pm Permalink
Howard B. Owens

JoAnne, that's how it was explained at the meeting.

Kevin, that's Randy McIntire, an assistant chief with the Town of Batavia Fire Department. I'm not sure if he was there to speak or just listen. He was called away on a CO detector alarm at a residence early in the meeting.

Feb 2, 2011, 6:58am Permalink
Paul Dibble

Just to clarify, Randy is the Chief of the Town of Batavia Vol.Fire Dept. He, along with other officers,for years have attended Town/County meetings that have proposed projects in the Town of Batavia fire district.

Paul Dibble,Past Chief
Town of Batavia Fire Dept.

Feb 2, 2011, 9:06am Permalink
Mark Potwora

Why should GCEDC be envolved anyways..who called them up..Did the motel chain ask for this..Where are Mr.Hyde's facts..If they don't create 19 low paying jobs then what? ..Will they amend this tax give away..If the other hotels as a whole lay off 19 workers what has been gained..Is this just another way to get them selfs a bonus..

Feb 2, 2011, 11:09am Permalink

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