Concord developers ask county for $92 million

Room tax revenue targeted

By FRITZ MAYER

MONTICELLO, NY — Sullivan County earns about $600,000 per year from the Hotel Occupancy Tax or room tax. Once the new resort hotel complex is completed at the site of the old Concord Hotel, developers expect that revenue to jump to as much as $3.5 million per year. And since they are the people who are bringing in this new revenue, they think they should get a big chunk of it to help pay for the project.

That was the essence of the message Joe Apicello, executive vice president of Cappelli Enterprises, brought to the county legislature on November 6.

Appicello said the banks funding the $1.2 billion project had found a gap of up to $30 million in the long-term financing of the project, and some of the revenue from the hotel tax should be used to fill that hole. The developers came up with a plan: after the complex is up and running, the first $1.2 million of the room tax would go to the county, as it does now. This money is used mostly to fund the Sullivan County Visitors Center. Any revenue beyond $1.2 million from the room tax would be used to pay down a $30 million bond, which would be floated to help pay for construction of the project.

In order for this to happen, the county needs to pass a resolution supporting new legislation in Albany. Lawmakers in Albany would then need to pass a law allowing legislators in Sullivan County to use the room tax revenue in this manner should they so desire.

Appicello said that even if other new hotels were to open in the wake of the Concord project coming online, all room tax revenue above $1.2 million would go to paying off the bond, which was proposed to have a 40-year payback period. According to the developer’s calculations, that would amount to at least $92 million, without factoring in interest.

Legislator Ron Hiatt said the $1.2 million sounds good right now, but in 30 years time it might not seem like so much. He asked if a cost of living adjustment for the county could be added to the proposal.

Walter Garigliano, a local attorney who is working on getting tax breaks for the project through the Industrial Development Agency (IDA), said, “The underwriters are advising against it.” He added that in order for the bond to remain tax-free for investors who might want to buy into it, the bond must be repaid entirely through municipal funds and can have no private sector component.

While almost all local officials have been supportive of the project, which has been dubbed “Entertainment City,” this most recent move sparked a bit of hesitation.

Legislator Leni Binder said she needed to see details in writing before making a decision, and that private discussions were necessary in order to move forward.

Legislator Dave Sager, while stressing his desire to see the project move forward, said that he was becoming concerned with the “but fors” of the project. Early on the developers said, “but for” large incentives from the state, the project would become a reality; the state gave the developers what they asked for. Then, there was a “but for” regarding tax breaks through the IDA; the IDA is granting the breaks. Now, said Sager, comes another “but for.” He said he didn’t want to see the legislature put over a financial barrel.

When one lawmaker asked what would happen if they didn’t agree to the scheme, several other lawmakers answered in unison before Appicello could respond: “They won’t build it,” they said, as if everyone knew the answer in advance. However, the developers have already invested millions of dollars on the project, and construction is well underway; therefore, to some observers, it seems unlikely that if the legislature were to refuse the plan that the developers would simply walk away.