Syracuse, N.Y. — The chairman of the Onondaga County Legislature says he does not support a 20-year, no-tax deal for the proposed 255-room Destiny USA hotel but would not rule out a lesser deal.
“A compelling case has not been made for a 20-year deal,” said Ryan McMahon, R-Syracuse.
Destiny USA, the mall development company created by developer Pyramid Cos. founder Robert Congel, has applied for a 20-year, 100 percent property tax abatement on a 17-story, $75 million hotel to be built across Hiawatha Boulevard West from the Destiny USA mall.
McMahon said it does not appear that the taxes that would be waived on the hotel over 20 years would be offset by the sales and room-occupancy tax revenues it would generate for the county.
Syracuse officials have said a 20-year exemption would cost the city and the county at least $20 million, or about $1 million a year, in potential tax revenues.
Destiny USA officials have said the hotel would generate $858,000 annually in sales tax and room-occupancy tax revenue for the county, plus $442,000 in sales taxes for the state. Its estimates assume the hotel would have an average occupancy rate of 65 percent — and would not cannibalize the county’s hotel market.
The company has said the hotel would not be commercially feasible without tax exemptions.
McMahon won’t get to vote on a tax deal for the hotel. The decision on whether to give the hotel tax exemptions is up to the Onondaga County Industrial Development Agency. But his position could have some influence in the matter because, as chairman of the Legislature, he appoints the agency’s seven-member board of directors.
The agency could decide to give Destiny what it wants, grant a less generous tax deal or turn the company down altogether. It voted earlier this month to have an independent consultant study the tax exemptions the company is seeking, the tax revenues it would generate and whether it would shift business away from other hotels in the county.
The 20-year, 100 percent tax abatement for which Destiny has applied is the most generous of the three offerings that are part of the agency’s uniform tax exemption policy. It is reserved for projects “providing significant and substantial economic and community benefit to the county.”
In addition to a 20-year deal, the agency offers a 10-year “basic” tax exemption plan and a 12-year “community benefit incentive” plan.
Under the 10-year plan, a project would receive a full exemption from property taxes for the first year, followed by nine years of partial exemptions. It’s for projects that derive at least 51 percent of their revenue from customers from outside Onondaga County.
Under the 12-year deal, a project would receive a full exemption for the first three years and partial exemptions for the next nine years. It’s for projects that qualify for the basic plan and also result in the cleanup of polluted land, reuse an existing building, or receive a gold or platinum certification under the U.S. Green Building Council’s Leadership in Energy and Environmental Design program.
Mayor Stephanie Miner has said she opposes any tax deal for the hotel because the Destiny USA shopping mall, to which it would be attached via a pedestrian bridge, already has a 30-year property tax exemption. The Syracuse Board of Education also opposes tax exemptions for the hotel.