Beacon school board, spa fail to reach agreement
It’s not clear when, or if, Mirbeau Inn & Spa Beacon, the luxury hospitality company that plans to redevelop the historic Tioronda Estate, intends to apply to the Dutchess County Industrial Development Agency for a property tax break. But if it does, it may have to do so without the support of the Beacon school district.
The company, which purchased the 64-acre property on Route 9D last year for $10 million, had planned to ask the IDA to approve a 15-year payment-in-lieu-of-taxes, or PILOT, agreement. If approved, Mirbeau would make a yearly payment to the City of Beacon and the school district based on its property assessment, but at a reduced rate.
The agreements are often granted to companies that are expected to contribute significant economic or job growth or another public benefit, such as affordable housing.
The IDA asked the city and school district to indicate their support for the proposal before Mirbeau submits its application. Beacon officials wrote a letter of support in November after the City Council discussed the matter in a closed session, but the school board has been a tougher sell. It has debated the proposal twice previously without reaching a decision.
Ed Kellogg, one of the owners of Mirbeau, spoke on Monday (Jan. 9) to the school board for a second time, but the discussion ended abruptly and without resolution when Kellogg would not commit to a “giveback” to offset the district’s potential loss of tax revenue.
The property owner currently pays the city and school district together about $100,000 in taxes each year. Under the agreement, Mirbeau has said that by the third year it would pay an estimated $175,000 annually to the district.
But the increase would come at a cost. Because the PILOT agreement would remove the estate from the tax rolls for 15 years, its property assessment — sure to increase as Mirbeau redevelops the parcel, which includes the former Craig House psychiatric hospital — would not count toward what is known as a “tax-base growth factor.”
The growth factor is a mechanism through which the state allows school districts to increase their tax levies based on an increase in taxable property assessments. In other words, as high-priced developments proliferate in Beacon, the district has benefited through nearly $2 million in additional tax revenue in the last three years, Board President Meredith Heuer said on Monday.
While Mirbeau’s redevelopment of the property, which has been vacant since the hospital closed in 1999, as a hotel and spa is sure to bring visitors who will shop on Main Street and eat in Beacon’s restaurants, board members asked Kellogg if the company would be willing to contribute to a “community fund,” such as the nonprofit Foundation for Beacon Schools, to make up for some of the growth-factor loss.
“Would you sit down with our attorney to get some assurances that if we do write this letter of support, there would be some benefit to the schools, whether it be through a community organization, or employment for students?” Board Member Anthony White asked.
“I’d have to talk to my partners,” Kellogg answered, noting that the company considers the additional PILOT revenue, plus the “upside” of those payments increasing as the property is developed, to be the major benefit of the proposed agreement. “This is totally outside of what we normally do.”
The conversation ended 90 seconds later.
“I would strongly recommend a pause, because we are really trying to work with you,” Board Member Kristan Flynn said. “We’re trying to make this happen, but we’re not in a real-estate negotiation.”
Kellogg said on Thursday that Mirbeau is discussing its next steps internally and with the IDA. After being approved by the Planning Board in December for the first phase of the redevelopment, the firm had hoped to begin work next month, but that’s in jeopardy after Monday’s meeting.
Kellogg said the company has supported community endeavors in its other locations, but not contractually. “I was a little bit surprised” by the response of the school board, he said, adding that the PILOT agreement would be “a huge economic gain for the schools and the city.”
“It might not be a tax payment, but it’s a revenue payment,” he said.