Thursday, February 15, 2018

City gives tax credits for hotel building

From Crains:

Little recent attention has been paid to the tax breaks, which have helped developers build a wave of hotels in onetime industrial neighborhoods—a pattern that Mayor Bill de Blasio has decried for pushing out manufacturers.

The city’s Industrial and Commercial Abatement Program dates back to the 1970s. ICAP was intended to spur landlords to invest in their real estate when few were doing so, and to attract and strengthen manufacturers, like those that once thrived in Williamsburg.

The program nearly zeros out property taxes for as long as 15 years and discounts them for up to a decade beyond that. The William Vale, for instance, used ICAP to wipe out about $1.7 million of its roughly $1.8 million recent annual tax bill, according to the city’s Independent Budget Office. The Williamsburg Hotel sought the benefit but missed a deadline to apply; sources said the developer is still seeking to qualify for the program.

Ironically, the incentive has helped to elbow out some of the businesses it was created to preserve.

“It appears to have fostered hotel growth in areas like Gowanus, Sunset Park, Williamsburg and other neighborhoods that were once primarily industrial,” said Doug Turetsky, chief of staff at the IBO, which has studied ICAP and its predecessor, the Industrial Commercial Exemption Program.

Hotel development has spread rapidly into those areas as tourism in the city has set record highs year after year.

Because hotels such as the Wythe tend to be more lucrative than industrial and other commercial uses in many areas of the Bronx, Brooklyn and Queens, hotel developers can afford to pay more for land. Also, unlike retail and residential uses, hotels generally have not needed special permission from the city to be in areas zoned for manufacturing. The result has been that hotels have been supplanting manufacturing and industrial businesses that once populated Williamsburg, Long Island City and similar areas.

Real estate investment firm Madison Realty Capital has estimated that 10 million square feet of industrial space has been converted to hotels or other uses in the city during the past decade. The tax break has fueled that.

2 comments:

Tommy Efreeti said...

Appreciate this being shared and circulated. Ironic. The problem is not with the program itself, although getting '1.7 out of 1.8' million in taxes owed wiped out is extremely unbalanced; it's that its scope was never limited towards retaining Industrial and Commercially active businesses. Hotels should've had no part in it.

M. How said...

Tommy Efreeti said: ". . . Hotels should've had no part in it. [Re: Many year tax break for manufacturing only]

However, rules can be (and are) fudged by the DiBlasio/Rebny industrial complex so that the Dems can keep supporting the expense of incumbents' election campaigns.

This is one of the contributing factors as to why incumbents always get re-elected and anyone challenging an incumbent Dem will never get elected.

So Queens (and the other boroughs) get the same old, same old.

Politicians win and voters always lose judging by the last 8 eight years.

When will we find another billionaire to challenge the powers that be?

Should I hold my breath?