HUDSON — Galvan is negotiating with the Common Council to reach an agreement on a proposed $22 million mixed-income housing complex at 75 North 7th St.
The developer and the city are “close to having an agreement that works for everyone,” Galvan Vice President of Initiatives Dan Kent said Friday morning.
The proposed five-story housing development, a collaboration between Galvan and Mayor Kamal Johnson, has faced a series of hurdles since it was first announced in late February.
The project hit a snag last week when the Common Council struck down a payment in lieu of taxes agreement, or PILOT, for the proposed 77-unit building.
“Many council members support the creation of affordable housing, but have concerns about taxes and making sure the project provides enough tax revenue,” Kent said about the proposed PILOT.
Kent has been speaking directly with council members to negotiate a compromise on the terms of the PILOT agreement. Galvan has shortened the length of the PILOT and increased its proposed annual payment by $3,000 in response to concerns raised by the council and the mayor.
Council members are hoping for further concessions.
Fourth Ward Alderman John S. Rosenthal declined to name the amount he would like Galvan to pay annually, but said he would prefer to see the developer make a higher contribution in light of the city’s current revenue woes.
Under the PILOT’s proposed terms, Galvan would receive a 95% tax exemption, reducing the amount it would otherwise pay in taxes on the proposed building. In exchange, the developer would pay a fixed annual rate of $80,000, increasing by 2% each year for 30 years.
PILOT agreements are a common tool used by municipalities to encourage development by offering reduced property tax incentives to manufacturing, industrial and nonprofit companies. Municipalities give $700 billion in property tax exemptions each year in New York, according to the Office of the State Comptroller.
Under the proposed plan, Galvan would demolish three houses next to the city fire department’s central station to build the proposed five-story housing complex. The developer has said it will relocate the tenants who live in the homes to make way for the new building, which will feature 77 mixed-income apartment units above 4,000 square feet of commercial space at ground level.
Galvan owns the three parcels of land. Two of the parcels, 75 North 7th St. and 69-73 North 7th St., are owned by the Galvan Initiatives Foundation. A third parcel, 65-67 North 7th St., is held by Hudson Collective Realty LLC, which is owned and operated by Galvan.
All together, the land value of the three parcels was assessed at $206,000 in 2020, according to Columbia County property records. The full market value, which is the price Galvan could fetch if it sold the properties, was assessed at a total of $736,000.
Galvan Foundation owns over 80 properties on the tax rolls in Hudson under five different nonprofit entities, according to property records.
The three North 7th Street parcels will be contributed toward the proposed $22 million project, according to Galvan. Galvan will not seek reimbursement for the value of those properties.
Galvan could legally seek reimbursement as a nonprofit applying for state funding, but will not do so, Kent said.
Galvan is aiming to secure the council’s support before Aug. 26, the deadline to apply for state funding from Home and Community Renewal, the state’s affordable housing agency. Council members have leverage in the negotiations because the developer cannot seek state funding without a council-approved PILOT agreement.
The state funding application deadline should not be used to pressure the council into giving approval before the project is fully vetted, Fifth Ward Alderman Dominic Merante said.
“Galvan’s deadline shouldn’t affect the council’s decision-making on something that we can’t pull back,” Merante said.
Merante’s main concern is that Galvan won’t pay its fair share of taxes on the completed building. The developer has agreed to enter into a new PILOT agreement at the end of the 30-year term, but Merante said that is insufficient.
“Why not end the PILOT and pay taxes on the assessed value of the building?” Merante said.
Home and Community Renewal, the state’s affordable housing agency, typically has two yearly funding rounds, meaning Galvan could apply for funding at a later date in the event that the PILOT fails to gain council approval before the August deadline.
Home and Community Renewal is offering $70 million toward affordable housing projects in the current funding deadline. The $70 million is available for new construction, rehabilitation of existing properties and adaptive reuse projects that provide multi-family rental housing, according to the request for proposals.
Kent defended Galvan’s decision to construct a new building rather than rehabilitate existing buildings, as some council members have proposed.
Galvan has completed substantial rehabilitation projects on nine buildings, creating 23 apartment units, Kent said. But those units must be higher-rent properties to justify the cost of rehabilitation.
There is a need for both rehabilitation and new construction to meet the demand for affordable housing in Hudson, he said.
“This project is an opportunity to meet the needs of those with lower incomes,” Kent said. “But in order to support the lowest income populations and create mixed income buildings, you need state support.”
Low-income housing is easier to finance than mixed-income housing, Kent said.
“It is not easy to do this way,” he said. “We are doing it because that is what the city’s Strategic Housing Action Plan called for.”