A recent referral to Stenger, Diamond & Glass LLP (SDG Law) led to a substantial Land Use and Development project that will generate hundreds of thousands of dollars a year to the Poughkeepsie area—a win-win for everyone involved. SDG Law has expertise in land use and commercial development which, combined with our attention to detail and understanding of local statues and regulations, made us a perfect fit for this project. This expertise was repeatedly utilized to create innovative results for our client.
After driving by a vacant lot on Route 9 in Poughkeepsie, Erfan Khan (a developer) contacted Houlihan Lawrence about a hotel he was interested in building. They immediately recommended SDG Law due to the firm’s experience and knowledge of both the legal and town issues. “I told the developer that Ken Stenger is the best land use attorney around. He is the only attorney I know that could help him with this complex project and to get the approvals needed to begin construction,” says Nicholas Licari, Associate Real Estate Broker, Houlihan Lawrence Commercial Group. And so the project began.
“After speaking to Nick, and meeting with Ken, I knew he was the perfect attorney for this project. His knowledge of the local area, coupled with his connections to all of the major players, was the reason this project moved along quickly,” says Erfan Khan, President of Empire Hotel Development Inc.
This wasn’t a typical “new construction project”. It required a firm that really knows the ins and outs of the law as well as the local community and its leaders. “At SDG Law, we think outside of the box, but we know everyone in the box and can get the job done,” explains Kenneth M. Stenger, Attorney at Stenger, Diamond & Glass LLP. Ken, a well-known name in the Mid-Hudson Valley, has more than 30 years of experience with Real Estate Law, Zoning and Commercial litigation.
About the Project:
What has been a vacant piece of land for the past 30 years will become a 93-room Hyatt Place Hotel (the first within a 60-mile radius of Poughkeepsie) and is scheduled to open in the Fall of 2018. The hotel is expected to generate $500,000 a year in tax revenue and close to $500,000 a year in salaries. The project will create 100 jobs for the Poughkeepsie area, between the construction phase and upon opening. Once opened, there will be 35 full time Hyatt Place employees as well as additional, ancillary jobs that will support the hotel’s business. The Hyatt Place Hotel will also add to the allure of Poughkeepsie being a tourist and business destination. Even with all these benefits, getting necessary approvals from the town to start construction wasn’t an easy task.
Although the land was previously approved for commercial use, it required several approvals before construction could begin. The first step was getting the site plan approved from the planning board. Once that was done, SDG Law began to seek tax relief with a pilot plan from the Town of Poughkeepsie. “We requested on behalf of Empire Hotel Development Inc. that tax would be phased in over 10 years to make it more affordable throughout the construction period and as their business grows,” explained Stenger.
Initially, the hotel was not considered a “redevelopment” of an existing commercial use which was required as a condition for that tax treatment because no other building had been constructed on the lot. SDG Law argued that “redevelopment” was in fact happening on the project. “I dug deeper into the case and found that the infrastructure was in place even though the land was vacant and we were able to show that this was in fact a redevelopment,” informs Stenger. Ultimately, the Town of Poughkeepsie, with the approval of the Spackenkill School District, amended its tax code to reflect this perspective.
Next, the Dutchess County IDA initially had some concerns about the project not fitting their model. The Board did not feel that the Hyatt Place was a “tourism destination” under article 18-A of the General Municipal Law.
The Hyatt Place Hotel is considered a “select service” hotel, meaning, it attracts a higher-end clientele than other hotels in the area does. Typically, it attracts repeat clientele as well. Currently, the only select service hotel in Dutchess County is nearly 30 years old. The Hyatt Place will refresh the Dutchess County offerings, allowing the county to be competitive for higher-end business travelers and tourists.
“We followed up with the appropriate agencies and provided additional information to state our case, and offered clarification to move the process forward,” informs Stenger. SDG Law shared the benefits of having a project in the area that qualifies as a “tourism destination”. As mentioned earlier, this project will bring in $1M in annual salaries and taxes as well an ancillary employment effect supported by businesses that actively engage with the hotel operation. “We reminded everyone who would that would listen that the empty lot only brought in $17,000 a year on tax revenue and that the Spakenkill School District can’t survive without development,” adds Stenger. Without the help of the IDA, the development could not get underway and none of this would have been possible.
How a one-firm approach can save the client time and money.
When you work with SDG Law, you have access to a team of attorneys and support staff that can handle all aspects of a project. After the necessary municipal approvals were obtained, Jessica Glass, transactional attorney at SDG Law, was brought in to oversee the closing of the financing. The first was a loan from Salisbury Bank’s Riverside Division and Bank of Greene County. The second was a bridge loan from Mercantile Bank and the third is SBA financing that will take over the Mercantile loan after construction is complete.
With three different lenders offering a total of $10M in financing, this project was a complicated financial matter and required an organized, knowledgeable attorney who could coordinate the multiple working pieces to ensure a timely simultaneous closing with all lenders. Glass has more than a decade of experience working with a variety of financial institutions and borrowers on a multitude of secured lending projects, which made her perfectly suited to accomplish this goal.
“This was quite the complicated transaction from a financing standpoint,” says Todd Rubino, Senior Vice President and Senior Commercial Loan Officer at Salisbury Bank’s Riverside division. “It was great to have two community banks, in conjunction with the New York Business Development Corporation’s 504 Loan Program, work on such a sizeable, local project,” adds Rubino.
Even with the complexities and setbacks of this project, the Hyatt Place is still on schedule– construction began within two years of when SDG Law began working with Empire Hotel Development Inc. “This was a case where some serious lawyering was done using creativity and connectivity…we are thrilled to be the law firm on a project that will bring roughly a million dollars a year to the Poughkeepsie area,” says Stenger.