Few questions over hotel tax breaks for proposed Best Western

By Joe Moskowitz
Nine years ago, an attempt by Margaretville businessman Peter Molnar to get tax breaks in order to construct a 62-unit hotel on Route 28 between Margaretville and Arkville drew dozens of signatures on a petition against his request.
Angry speakers stood up at an Industrial Development Agency (IDA) public hearing to question why he should be extended such a privilege.
But on Tuesday, just 10 people showed up to a similar meeting, only a few questions were asked and the entire hearing lasted just 18 minutes.
Molnar and his wife Carol, own Margaretville Lodging LLC. The company operates four facilities, most notably the Margaretville Motel. The Molnars have been trying to construct a 62-unit Best Western Hotel on that site.
Recently, new life was breathed into the project when the State of New York offered them a $1.6 million economic development grant.
Margaretville Lodging LLC then applied to the Delaware County Industrial Development Agency for acceptance into the Payment In Lieu Of Taxes (PILOT) program. The property title would be owned by the IDA for 10 years, then transferred back to Margaretville Lodging LLC for a fee of one dollar. Not all taxes would be exempt. Sales tax would not have to be paid on construction materials and equipment, but once operational, all sales taxes would have to be collected. IDA Director Glen Nealis explained that Margaretville  Lodging LLC would still have to pay property taxes. Margaretville Lodging LLC currently pays $8,400 on its properties. Staring the first year, assuming the property increases in value by $4.8 million, it would have to pay 40 percent of the additional property taxes. That would work out to an estimated $42,800, and would increase by five percent each year, reaching 100 percent at the end of the program.
Nealis said that during that decade, Margaretville Lodging, LLC would pay a total of $625,000 in property taxes compared with $84,000 if it isn’t built. Margaretville Lodging LLC would save $328,000 from the tax breaks. It would still have to pay full Arkville fire and lighting district taxes.
The IDA is not going to make a decision until March.
The project did get the endorsement of Middletown Supervisor Marjorie Miller, but heavy lifting still remains. By their own estimate, the Molnars will need to find a lender willing to grant them a $4 million construction mortgage.