By Alberto Gilman
A developer seeking to renovate the former Washington Street School is seeking a 15-year Payment in Lieu of Taxes (PILOT) from the City of Newburgh.
The development group 191 Washington Street LLC seeks to convert the former 40,000 square foot school site, which is made up of the parking lot, school auditorium and classrooms into a mixed used commercial and residential site. According to documents, the former school building, which was built in 1958, has remained off the city tax roll.
191 Washington Street LLC, represented by partners Sisha Ortuzar and Erik Cooney appeared before the City of Newburgh Industrial Development Agency (IDA) last week to discuss the project.
For the PILOT and other financial related questions, on behalf of the IDA, MRB Group prepared a cost-benefit analysis report for the IDA and the general public for their review. According to the report, the total cost of the project construction and renovation was projected by MRB to be at $23 million. Ortuzar said funding for the project would be provided by the developer.
MRB reported that the current site is currently assessed at $1 million. Upon completion of the project, the assessed value would increase to $9.8 million by the 15th year, the first year of full taxes. This figure was estimated by the city assessor. For PILOT revenue, the report listed that in the first year, revenue generated would be $50,671 and would steadily increase year to year and by the end of the PILOT period, $3.1 million would be ultimately generated in PILOT payments. The construction phase would create 41 on-site and 12 indirect construction jobs, 53 in total that would generate $2.8 million annually. Once the project is completed, 47 jobs would still be available that would earn $2.8 million annually as well.
The fiscal benefits from the project included $18,635, associated with wages, which is a one-time sales tax revenue that would benefit Orange County. The county would also benefit from an estimated $456,872 sales tax revenue once the project is completed over the 15 year PILOT term. This figure would be related to ongoing jobs and local spending after project completion. $3.1 million in property tax revenue would be generated for Orange County, the city and the Newburgh Enlarged City School District and $2.8 million of sales tax revenue would be generated for the county from the retail spaces. Over the course of the PILOT’s span, the total benefits would be $6.3 million.
The report also listed a one-time sales tax exemption at $652,015 and a mortgage recording tax exemption at $215,393. This would total $5.5 million in net total exemptions over the 15 year PILOT schedule. However, this is a theoretical figure according to the report because should the PILOT not be approved, the project would not move forward at all.
The school auditorium was proposed to be a commercial space with a brewery serving as the main anchor tenant. Snowfall Brewing LLC, which is owned and operated by Nate Morey and his wife, Sylvia, had been in contact with Ortuzar who showed them the auditorium space and from there they both expressed interest in bringing their business to Newburgh. The new business, according to IDA documents, was anticipated to create 15 new full-time and five part-time jobs with three additional maintenance positions created.
For the brewery to function, there would need to be high ceilings for tanks and a solid foundation for the tanks to stand on which the auditorium offers at the site. The auditorium would also serve as a communal commercial space with several other spaces for food vendors and other business owners surrounding the brewery setup that would be placed in the center of the building.
The rear of the school building that includes two stories of classrooms would be converted into residential apartments and two additional five story buildings would be constructed in the current parking lot spaces. There would be 12 units in the school building with 58 units between the two buildings for a total of 70 units. These units would be available at the market rate. The buildings would feature commercial spaces on the ground floor while the apartments above would feature one, two and three bedroom apartments. An underground parking garage would also be included in the design that would allow for accessibility to tenants who may have limitations. A small urban park in the center of the development with tables and chairs would be available to all community residents to enjoy at their own leisure.
Ortuzar said project would go through a projected two-phase process. The existing school building with auditorium and classroom spaces would receive renovations, anticipated to take six to eight months. This would then be followed by the construction of the two buildings which would take a year to complete. Ortuzar projected an 18 month period for the project, IDA documents listed by 2024.
According to Ortuzar, meetings with the zoning board have been conducted, the developers have started the process with the planning board and the developers plan to appear before the Architectural Review Commission.
“What we want the people to know that maybe they don’t, is that our intention here is to revitalize this area and by doing that, help kickstart more significant development here in Newburgh,” said Ortuzar. “I’d love the people to know that we are from here. I mean, not originally, but we are here, we are not just investing in Newburgh as an investment strategy. We live, work here and we are part of the community.”
Wireworks, developed by Ortuzar and 233 Liberty Street developed by Cooney were several projects highlighted here already in the city. With this project, the hope would be to revitalize that surrounding neighborhood.
Comments from the public expressed support for the project or the proposed PILOT for approval. “I support this project. And so I want to thank the IBA for the job that they have been doing and are doing. I’m trying to look out for the best interests of the City of Newburgh residents and I believe that this project does that,” said Councilman Anthony Grice. “The city council does not make this decision. This is an IDA decision, they are their own board. I really believe that this is the type of project that we need to have in that neighborhood to revitalize it.”
“I would love to see that corner be brought back to life. And I would like to see it be brought back to life in a way that’s responsive to the diverse needs of our community,” said Orange County Legislator Genesis Ramos. “I also want to just say in terms of community benefits, I really am looking forward to see how the IDA truly holds accountability to this project.”
“I support the PILOT, the 15 year PILOT. I love your vision. I love what you plan to do in that area,” said Councilwoman Ramona Monteverde. “This will jumpstart that area and again, bring economic development to an area that’s extremely depressed.”
“I think it’s an excellent example of repurposing existing buildings and providing for many things that the city needs in an equitable and meaningful way,” said Michael Lebron. “I am here in support of this project. I think it’s an absolute no-brainer,” said Bill Fioravanti. “This corner is going to be transformed and I am looking forward to it,” said Judy Thomas.
The public hearing took several more comments before concluding that evening. Further questions can be directed to the IDA and the MBR report, IDA documents and materials on the particular project are all available on the city website for public review.