The Ulster County Industrial Development Agency reviewed two projects, both headquartered on the same block of Wall Street in the Stockade district of Kingston, at its monthly meeting this Wednesday morning. Taken together, Hudson Valley Kingston Development (HVKD) at 301 Wall Street and BBG Ventures at 311-313 Wall have told the Ulster County Industrial Development Agency they will create 67 new full-time jobs the first year of their operations and have 95 in the third year. In a county where new jobs have for almost a decade been hard to come by, the employment generated by the two entrepreneurial enterprises could provide an economic boost.
The IDA approved BBG’s project. It postponed consideration of HVKD’s application until its next meeting on November 8, when it is likely the Kingston Citizens, an organization focused on increasing citizen engagement in local government, will show up. A handful of members of the group, which has very recently expressed concern about the project and is circulating a petition, appeared at this Wednesday’s IDA meeting. Kingston Citizens says it is fearful of Stockade gentrification.
The time when the lion’s share of UCIDA applications came from manufacturers is over. The various service sectors, some higher-paying than others, are where the action is. But there’s a degree of restlessness in the communities as to whether Ulster County is getting is getting its money’s worth for the tax benefits its IDA can provide.
New York City-based developer Charles Blaichman and his corporate colleagues propose a boutique hotel composed of four separate buildings in the Uptown neighborhood totaling 29,000 square feet in all. Blaichman told the IDA he expects to double the 20 full-time jobs plus twelve part-timers in his first year by his third year, when he’ll have 20 part-timers. Also the owners of four existing Stockade office buildings, Blaichman and his partners hope that market demand for a multi-locational boutique hotel (he projects 60 to 65 percent occupancy, attracting 24,000 visitors annually) will justify a greater supply of rooms. There could be more local jobs “as the project grows and new locations open,” the HVKD application to UCIDA notes.
BBG Venture principals Ben Giardullo and Zach Lewis aim to complete their Kingston Food Exchange at 311-313 Wall (the former Kingston Woolworth’s) by next April. In their first year, they project 47 full-time jobs (plus 14 part-timers), a number projected to increase to 55 (plus16 part-timers and 13 seasonals) in the third year of operation. They say sublease operations could add to those numbers. Unlike HVKD, which is eligible for the UCIDA’s standard ten-year property-tax exemption on improvements, BBG is seeking an exemption only on sales and use and mortgage taxes. BBG promises “a fresh-food market, a farm-to-table foods hall, a state-of-the-art food manufacturing facility and business incubator with food education and community programs” in its 35,000-square-foot space.
The building is owned by 311 Partners, a separate corporation controlled by Lewis and his father, who are expecting federal and state historic tax credits. Once 311 Partners has completed construction work, BBG expects to invest $2.8 to three million dollars for buildout and finishing. Lewis, who attended the IDA meeting this Wednesday morning, was happy about his project’s approval.
“I love this place. We need to think about everybody here,” Carolita Johnson told the UCIDA public hearing on HVKD last Wednesday evening. A Kingston resident and an artist, Johnson works at Outdated, the café on the same block of Wall Street, and sells her art in New York City. She doesn’t drive. She said she recently had great difficulty finding an affordable place to rent within walking distance of her place of work. “All the rents have gone up incredibly,” she told the IDA.
She had nothing against developers, she said, but “if they make money, we should make money.” She worried that the wages being created were going to be less than professional or blue-collar jobs. Most of the available service jobs for young people paid too little for them to be able to rent a place to live.
Some service industries generate more income than others do, as figures from the 2015 census County Business Patterns illustrate. The latest numbers show a wide variation in the pay of Ulster County people in the service industries, with professional and scientific jobs at the top, administrative, health, creative and real-estate jobs somewhere in the middle, and retail, accommodation and food jobs toward the bottom. That pattern is similar throughout the nation.
According to its application to the UCIDA, HVKD’s full-time jobs would average about $32,000 annually, on the high side for local accommodations employees but at about $600 a week not a totally robust wage. On the plus side, HVKD plans high-end accommodations and will bring large numbers of relatively high-income visitors to the heart of Kingston.
The owner of the former Woolworth’s, 311 Partners, will employ 43 construction workers. When it takes over, BBG, the operating entity, expects to pay an average $60,000 a year for the 47 full-timers it expects to employ its first year of operations. That’s well above the average county wage. Part-timers and subcontractors are also expected.
HVKD received both support for and opposition to the Stockade boutique hotel at the UCIDA public hearing last Wednesday. Former owner of The Inn at Stone Ridge Dan Hausberg said the project would increase the net value of community assets. Pioneer Capital executive Paul Hakim noted that Blaichman was “speculating with his own dollars” and that the community had nothing to lose. Entrepreneur Don Tallerman of Dragonsearch and the Senate Garage said the Stockade community needed “a hotel where we can walk.” Marc Miller, who had sold his Fair Street building to HKVD, said the project “would bring people in who would invest in the community.”
Jean Jacobs, who opposed the project, said she liked tourism but “we need a balance.” She had concerns about whether the project would happen and whether it would provide jobs with a living wage. Some other developers had not asked for tax breaks, she said.
The UCIDA, which has a generally good track record in terms of applicant compliance, has in recent years tightened its procedures. Clawback provisions can force repayment of tax benefits. Annual status reports of IDA-supported projects are being more closely scrutinized. The time may have come for further follow-up actions, including greater documentation and clearer rules for clawback provisions. Public education about IDA decision-making is presently inadequate.
But that’s not the most important potential community benefit the IDA can bring. Carolita Johnson was correct: “If [a developer] makes money,” she said, “we should make money.”
In other words, create a win-win situation. The HVKD application promises an attractive and imaginative addition to the community fabric. With project consideration postponed to the next IDA meeting on November 8, there may be an opportunity to make it just a little better without scaring off a worthy applicant.
The UCIDA could have had a suggestion for Blaichman and his colleagues, who are anticipating a 60 to 65 percent occupancy in their innovative boutique hotel. If HVKD achieves 70 percent occupancy, the IDA could have said, the 13 of its 20 employees projected to make less than $30,000 a year should get a raise to that level. That provision would cost HVKD about $50,000 the first year, by my calculation, triggered only if its profitability is higher than anticipated in its pro-forma budget. That’s a reasonable price for lifting 13 local families to a living wage. I think it’s an appropriate additional ask in exchange for the IDA benefits the developer will be accruing.
“Increasing the minimum wage is proven to reduce worker turnover and improve productivity,” state Labor Department spokesperson Cullen Burnell explained last year. “
Additionally, when low-wage workers receive a pay increase, they tend to spend it locally.”
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